PAN essentially helps the tax department ‘identify’ the person or a company undertaking the transaction, which could be payment of tax, depositing or withdrawing money from a bank or any of the specified transactions.
Post the announcement of Budget 2019 ( and yet to be ratified by parliament), there are 4 important PAN-related rule changes that one needs to be aware of:
1. Consequence of not linking PAN with Aadhaar
Presently, under Section 139AA (2), the PAN allotted to a person shall be deemed to be “invalid”, in case the person fails to intimate the Aadhaar number. However, going forward, if a person fails to intimate the Aadhaar number and link PAN with Aadhaar, the PAN card will be made “inoperative”.
The last date to link PAN with Aadhaar is September 30, 2019. The last date of 30th September still stands but as per Budget 2019, the operative word has been proposed to be changed from “invalid” to “Inoperative”, with effect from September 1, 2019.
2. Deduct TDS for a professional job
If you have hired a professional contractor for the construction of your home or a designer, architect or for that matter any professional for personal use, the new Permanent Account Number (PAN) rule asks you to deduct TDS before making the payment and deposit the TDS amount with the government using the PAN of the professional.
Currently, one is not required to deduct TDS on any payment made to a contractor or professional when it is for personal use. Further, if the individual is carrying on business or profession which is not subjected to an audit, there is no obligation for TDS to be deducted, even if the payment is for the purpose of business or profession.
However, the government felt that due to this exemption, the substantial amount by way of payments made by individuals in respect of contractual work or for professional service is escaping the levy of TDS, leaving a loophole for possible tax evasio
