Thursday, 18 October 2018

NO PAN -Applicability of Section 206AA of Income Tax Act- Whether further Surcharge and EC applied

As you are ware that income tax is required to be deducted at source under provisions outline in chapter XVII of Income tax Act ,1961 . More precisely part "B" deals with various situation where in tax is deducted at source at specified rate . However in case of recipient of income is not in a position to provide his Permanent Account Number (PAN) , Tax will be deducted at source by referring provision as laid down under section 206AA of Income Tax Act . The section is read as :

After section 206A of the Income-tax Act, the following sec­tion shall be inserted with effect from the 1st day of April, 2010, namely:—
"206AA. Requirement to furnish Permanent Account Number.—(1) Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereaf­ter referred to as deductor), failing which tax shall be deducted at the higher of the following rates, namely:—
          (i )  at the rate specified in the relevant provision of this Act; or
         (ii )  at the rate or rates in force; or
        (iii )  at the rate of twenty per cent.
(2) No declaration under sub-section (1) or sub-section (1A) or sub-section (1C) of section 197A shall be valid unless the person furnishes his Permanent Account Number in such declaration.
(3) In case any declaration becomes invalid under sub-section (2), the deductor shall deduct the tax at source in accordance with the provisions of sub-section (1).
(4) No certificate under section 197 shall be granted unless the application made under that section contains the Permanent Ac­count Number of the applicant.
(5) The deductee shall furnish his Permanent Account Number to the deductor and both shall indicate the same in all the corre­spondence, bills, vouchers and other documents which are sent to each other.
(6) Where the Permanent Account Number provided to the deductor is invalid or does not belong to the deductee, it shall be deemed that the deductee has not furnished his Permanent Account Number to the deductor and the provisions of sub-section (1) shall apply accordingly."    
  The responsibility of deduction of tax at source is fastened on     payer (Deductor) . Payer should examined highest rate         
  amongst  (i )  at the rate specified in the relevant provision of     this Act; or (ii )  at the rate or rates in force; or  (iii )  at the 
  rate of twenty per cent.
        Therefore deductor should first find out nature of Income as may be received by recipient . Thereafter he checks whether any specific rate of tax  leviable as a special rate e.g. section 115BBA for Non resident sportman /entertainer etc.@ 20%  ,115BBF Royalty income based on Patent @10%. Thereafter he checks rate in force as prescribed under section 2(37A) of I T Act . To verify rate in force one needs to go to Schedule -1 to find out regular tax rate and TDS both . On completion of this exercise deductor needs to apply 20% in comparative table . 
                       After completing exercise , the moot question arises that whether this rate is further increased by Surcharge and Education cess . It was held in case of Computer Sciences Corporation India (p) Ltd Vs ITO [2017] 77 306 (Del) that no further surcharge or EC will be added while computing tax liability . It was further observed by tribunal that whenever legislature intended to levy any additional tax over and above head rate , specific provisions are embedded in sections . It was further illustrated and referred section 2(29C) -Maximum Marginal Rate , Section 115JB MAT etc. 

                   Thus it is clear that when recipient is not PAN holder and when section 206AA is applied , only tax rate arrived under above referred process will hold valid for chargeability of tax and no further surcharge or EC be added.   

Friday, 12 October 2018



We are just about to celebrate Diwali Festival. In recent time celebration has become a phenomenon. We may get joy out of celebration but not happiness. Today, one does not have time to look into his own self (Spiritually).   The distance between two places in the world is shortening but the distance between two human beings is ever increasing. The obvious reason is, life has become too much materialistic. Life can be lived, driven by desires or knowledge. If life is lived based on desires, it is easy and which provides instant gratification. When one tests the living life based on luxury and comforts, he does not dare to venture in to a living life based on knowledge (Gyana). A lifestyle based on desire gives quick and visible result but in the process human values are eroded whereas the life style based on Gyana may appear to be difficult however, at the end of the journey it ensures abundant happiness which is a part of eternal satisfaction as against more tangible joy derived with materialistic approach.

         Life is a Festival bestowed by Almighty to Jiva. One should live life with human values. Human values are the virtues that guide us to take into account the human element when one interacts with other human beings. The legacy of how to inculcate human values is found in our Shastra. In today’s fast moving life, we as parents struggling hard to have time to interact even with our children on daily or weekly basis. We are overlooking our parents. We hardly interact with our neighbours. Mostly human touch is lost  in all our day today human activities. We are so much concentrated on our goal of becoming financially wealthier by ignoring the wealth of human relationship.

         We are missing one point that we are human beings and we need human beings to live  on this earth. There is hardly anything that is not found out  in our rich legacy of Shastra to discover new ways and means for human value appreciation. The common ground of all Religions is human value. The human values are embedded in customs , festivals or traditions. It is important to  follow such traditions and rituals and celebrate the festivals with the spirit and intent for which it has been introduced in our society. There is no  advocacy to follow Religion blindly but desirable to have a  look at the customs and tradition with a scientific approach.

         India has preserved human values by introducing festivals, traditions and customs. As we know, Smriti (memory) has limited life with reference to place and time, while process of practicing values through other modes known as Shruti, is timeless. India has rich legacy of Shruti . The Ramayana, Mahabharat , Gita  and many more other books are filled up with full of experience and wisdom for human beings. All those are torch bearer for the society.  

         Practicing Human Values are social, ethical and spiritual process in the mankind. The most of the parts of n world need to have more experience in practicing human values. They are  appreciating human values  based on their social requirements. Unless the society respects each human being, human value chain can not be tied up.  For example a marriage ceremony is an acceptance of natural need of human being, prevalent with utmost dignity, for  many years in India. The relationship between two families is at paramount with dignified human values. Other examples of human value appreciation are respecting elders, teachers, parents and  helping needy person in society.

         The reality is, Western world has been practicing Dharma (to act), Arth (Creation of money) and Kaam (desire). All activities are self-centered.  They are far ahead in following this path with full of enthusiasm but they know less about MOKSH (Spiritual eternity or happiness within soul ). We follow them till they travel and stop there. We need to recall our rich legacy of practicing human values. We need to see whose are we rather than who are we. Money has limited purchasing power. Let us respect relationship and follow the call of conscience. Some retrospection is suggested by posing question to ourselves whether birth has taken as per our choice, whether death is as per our expected time, whether the result of our efforts is as per our expectation and …….Have a faith in Supreme Power .

         Let us progress by respecting human values.


Tuesday, 9 October 2018


Ans      : As per recent changes in the month of March ,2018 ,the definition of NRI changed . NRI means a person resident outside India ,who is citizen of India . Earlier who is foreign citizen but Indian origin was also considered as NRI . In view of changing in the definition ,now Indian origin but holding foreign citizenship has to secured Overseas Citizen of India Card to qualify as NRI . By securing OCI card under section 7(A) of Citizen Act 1955 , Foreign Citizen of Indian origin becomes Non Resident Indian . Earlier without holding OCI card merely showing documents of roots of Indian origin were considered as sufficient proof to establish as NRI . This compels foreign citizen of Indian Origin to secured OCI card and claim eligibility for permissible investment under NRI category . Merely holding Indian Visa is not sufficient to qualify as NRI.