Tax demands over non-linked PANs leave firms in tight spot

Many employers are in a fix over demand notices from the Income Tax (I-T) Department for short deduction of tax on the income of employees who had not complied with a May 31 deadline to link their PAN and Aadhaar numbers, with some firms reporting tax demands even for workers earning less than the taxable income threshold.

The Revenue Department, this April, said that PANs will become inoperative if not linked with Aadhaar by May 31, necessitating tax deductions to be made at a higher rate, and refunds being withheld. This marked an extension from a similar directive last year that these consequences of inoperative non-Aadhaar linked PANs were to kick in from July 1, 2023.