As per Section 206AA of the Income Tax Act, if you do not furnish your Permanent Account Number (PAN) to the deductor, then the deductor shall deduct TDS at the higher of the rate prescribed in the relevant provisions of the Act or at 20%.
Usually, every employer deducts Tax Deducted at Source (TDS) from the salary, what is known as the ‘average rate of income tax’ of the employee for the year. It is denoted as the average income tax rate equal to income tax liability (arrived at based on slab rates) divided by the employee’s predictable income for the assessment year.
Archit Gupta, Founder & CEO of Clear, said, “Filing TDS returns is mandatory for all the persons who have deducted TDS. TDS return is to be submitted quarterly, and various details need to be furnished like TAN, amount of TDS deducted, type of payment, PAN of deductee, etc. Also, different forms are prescribed for filing returns depending upon the TDS deduction purpose.”
As per Section 206AA of the Income Tax Act, if you do not furnish your Permanent Account Number (PAN) to the deductor, then the deductor shall deduct TDS at the higher of the rate prescribed in the relevant provisions of the Act or at 20%.
Section 192 does not specify a TDS rate. TDS will be deducted as per the income tax slab rates applicable to the taxpayer for the relevant financial year for which the salary is paid.
The employer usually does the tax calculation at the beginning of the financial year. The TDS is to be deducted by dividing the employee’s estimated tax liability for the financial year by the number of months of his employment under the particular employer. However, if there is no PAN of the employee, TDS shall be deducted at the rate of 20% plus 4% cess,” said Gupta.
The employer adjusts any excess or deficit arising from any earlier deduction by increasing or decreasing the number of subsequent deductions during the same financial year. If the employee has made any payment as an advance tax, then the same can be adjusted for the calculation of TDS. The employee needs to intimate the same to the employer.
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