Employer to Cut 20% Tax from Salary for Not Sharing PAN, Aadhaar

Employees will soon have to pay 20 per cent from their salary as tax if they fail to provide PAN (Permanent Account Number) and Aadhaar details with the Employers.

The recent circular by Central Board of Direct Taxes (CBDT), which came into effect on January 16, will be applicable for all those earn above Rs 2.5 lakh per annum.

With this rule, the CBDT aims to keep a close eye on TDS (Tax Deducted at Source) payments and revenue earned via this segment, which amounted to around 37 per cent of the total direct tax collection in FY19.

In its 86-page circular issued by the CBDT, clearly stated that employees have to quote PAN and Aadhaar details compulsorily as per the Section 206-AA of the Income Tax Act.

"Section 206AA in the Act makes furnishing of PAN or Aadhaar number, as the case may be, by the employee compulsory in case of receipt of any sum or income of amount,on which tax is deductible," The circular reads.

The circular further read that in case an employee fails to provide the required details, the employer is responsible to make deductions either at the tax rate on the employee's salary or 20 per cent or above.