Government Eases TDS/TCS Rules for PAN-Aadhaar Unlinked Death Cases

The government has relaxed TDS/TCS provisions for individuals who pass away before linking their PAN and Aadhaar. The Central Board of Direct Taxes (CBDT) issued a circular on August 5, addressing taxpayer difficulties. Those unable to link PAN-Aadhaar by March 31, 2024, will face no liability until May 31, 2024.

The government has announced a relaxation in Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) rules for cases where the deductee or collectee passes away before being able to link their PAN and Aadhaar cards.

The Central Board of Direct Taxes (CBDT) issued a circular on August 5, acknowledging the difficulties faced by taxpayers. According to the circular, provisions of the Income-tax Act have been eased in case of the death of a taxpayer before PAN-Aadhaar linkage could be achieved.

To address taxpayer grievances, the circular specifies that there will be no liability for deductors/collectors to deduct/collect tax in relevant transactions entered into until March 31, 2024, if the taxpayer has passed away on or before May 31, 2024. Previously, on April 23, 2024, the CBDT extended the deadline for PAN-Aadhaar linking.

According to the Income-tax Act, 1961, individuals allotted a PAN as of July 1, 2017, must link it with an Aadhaar number upon payment of a prescribed fee. Failure to do so renders the PAN inoperative, leading to consequences such as no refunds, no interest on delayed refunds, and higher TDS/TCS rates.

(With inputs from agencies.)