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PAN Cards And FDs


wealthymatters.comUnder section 139A of the I-T Act,only persons whose income is chargeable to tax are required to obtain a PAN.However section 206 AA of the same Act, which became effective from assessment year 2010-11, makes it mandatory for every person to furnish PAN card in their transactions with banks and financial institutions.So section 206AA compeled even those without a taxable income to obtain a PAN, failing which tax would be deducted at source.

A writ petition was filed before the Karnataka High Court by A Kowsalya and two other small investors, who had made investments in financial institutions (F Is). They do not have any income other than the income received from F I s and they have declared this under Form 15G. Form 15G is usually used for declaring that a person’s income is below taxable limit, and therefore, the bank or FI is not required to deduct tax at source while making payments.The FIs, however, told the petitioners that tax would be deducted at source if they did not furnish PAN cards as required under section 206AA of the Income-Tax Act. The petitioners challenged the validity of Section 206AA of the Income-tax Act in their writ petition. Read more of this post

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