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No PAN? Pay upto 20 percent tax from April 1

Wednesday, March 31, 2010
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Bangalore: Get ready to pay more tax up front on any income received, if you are unable to provide your permanent account number (PAN) from April 1. The tax deducted at source, or TDS, on payments could be as high as 20 percent for those not quoting PAN against the regular rate of 2-10 percent, reports Economic Times. The Union Budget had made it mandatory for residents and non-residents to quote this number or face a higher rate of withholding tax. It comes into effect from Thursday, April 1. The goal of the new rule is to encourage more people to obtain PAN, a 10-digit alphanumeric tax payer identification number, and thereby become visible to tax authorities. The tax base of the country is a mere 3.3 crore because of massive underreporting of incomes and large-scale exemptions. Quoting of PAN will allow income tax authorities to establish an audit trail and catch tax evaders. Senior citizens could just file Form 15H in absence of tax liability and become eligible for exemption from TDS. If they do not furnish a PAN they will have to face a TDS rate of 20 percent. Other Indian residents not falling within the tax bracket will also have to obtain a PAN and quote it where required. Tax deducted at source can be adjusted against a taxpayer's actual tax liability. But in the case where there is no tax liability it has to be claimed back by filing returns.
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