22/07/2025
Summary of CBDT Circular No. 6/2025 (Dated 21 July 2025)
The Central Board of Direct Taxes (CBDT) has issued a partial modification to Circular No. 3 of 2023 regarding the consequences of PAN becoming inoperative as per Rule 114AAA of the Income-tax Rules, 1962.
# # # Key Highlights
- **Partial Modification**: The new circular partially relaxes rules related to the applicability of higher TDS/TCS rates when a person’s PAN is inoperative due to non-linkage with Aadhaar.
- **Scope**: The relaxation applies to tax deductors/collectors (TDS/TCS) who have deducted or collected tax at a higher rate during the period when the PAN was inoperative and the PAN was later linked with Aadhaar and became operative.
- **Relief Granted**:
- For tax deducted or collected at a higher rate solely due to inoperative PAN, if the PAN becomes operative (by linking with Aadhaar) on or before 31 July 2025, the deductor/collector may request the refund/credit or adjustment for excess TDS/TCS.
- The refund or credit will be allowed for cases where the PAN becomes operative after tax deduction/collection, and the correct lower rate would have applied if the PAN was operative at the time.
# # # Steps for Deductors/Collectors
- File a correction statement under Section 200(3) or 206C(3) of the Income-tax Act once the PAN is operative.
- The lower TDS/TCS rate will be applied retrospectively for transactions during the period the PAN was inoperative but became operative by the cut-off date.
**This update provides significant relief to taxpayers and tax deductors/collectors affected by higher TDS/TCS rates due to delays in linking PAN with Aadhaar, provided the linkage is completed by 31 July 2025.**
