The income tax department issued a directive on Tuesday urging taxpayers to complete linking their Permanent Account Number (PAN) with Aadhaar by May 31st to circumvent potential tax deduction at an elevated rate. According to the income tax regulations, failure to link PAN with biometric Aadhaar necessitates a deduction of Tax Deducted at Source (TDS) at twice the standard rate applicable.
The income tax department released a circular last month, indicating that no punitive measures would be pursued for instances of insufficient TDS if the taxpayer connects their PAN with Aadhaar by May 31st.
"Please link your PAN with Aadhaar before May 31, 2024, if you haven't already, in order to avoid tax deduction at a higher rate," the income tax department wrote in a post on social media platform X(formerly Twitter).
In a different communication, the I-T department instructed reporting entities, such as banks and forex dealers, to submit Statement of Financial Transactions (SFT) by May 31st to evade potential penalties.
The department said in the statement on X, "The deadline to file SFT (Statement of Specified Financial Transactions) is May 31, 2024. Avoid penalties by filing accurately and on time."
Forex dealers, banks, sub-registrars, non-banking financial companies (NBFCs), post offices, issuers of bonds/debentures, mutual fund trustees, and companies disbursing dividends or executing share buybacks are among the entities obligated to submit Statement of Financial Transactions (SFT) returns to tax authorities.
These designated institutions must provide information on specific financial transactions or any reportable accounts recorded or maintained by them throughout the year. Failure to file SFT returns promptly could incur a penalty of up to Rs 1,000 per day of default. Moreover, non-submission or inaccurate filing of statements may result in penalty imposition. SFT enables the income tax department to monitor high-value transactions conducted by individuals.