20% TDS If Employee Does Not Shares PAN Or Aadhaar

The government has mandatorily asked employees who are subject to TDS deduction to produce their PAN or aadhaar or else face mandatory 20% deduction from their salary.
In a recent circular relating to TDS deduction on salary, the CBDT has also included aadhaar as the valid proof for those who do not own PAN after the government modified the rule and allowed those without PAN to quote aadhaar.

"Even now, in case you do not share your PAN, the employer or the bank has to deduct tax at the specified rate. Now, Aadhaar has been added to the rules," explained a tax officer.

While most of the employees share their PAN, some may not be willing to share their details.

In the last budget, the government made two identification proofs as interoperable and allowed quoting of aadhaar in case a person does not possess and would infact suo moto issue when the person quotes aadhaar at some place.

"The deductor has to determine the tax amount in all the three conditions and apply the higher rate of TDS. However, where the income of the employee computed for TDS... is below taxable limit, no tax will be deducted. But where the income of the employee computed... is above taxable limit, the deductor will calculate the average rate of income tax based on rates in force as provided in sec 192. If the tax so calculated is below 20%, deduction of tax will be made at the rate of 20% and in case the average rate exceeds 20%, tax is to be deducted at the average rate," it said.

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