In a major step towards boosting income tax compliance, the government has made it mandatory for employees who are subjected to tax deduction at source (TDS) to share their PAN or Aadhaar card number, else 20 per cent of their salary would be deducted as tax, reports Economic Times.
The Income Tax department has asked the employers to deduct 20 per cent salary as Tax Deducted at Source (TDS) from all employees who fail to furnish PAN and Aadhaar details.
The inclusion of Aadhaar card number along with PAN card details in the rules comes after the government had last year amended the law to mandate those without PAN cards to quote their Aadhaar card numbers.
The outcome of the amendment to the law is that when someone without a PAN number quotes their Aadhaar number, the tax department automatically generates a PAN number for the said individual.
As per the IT department officials, whenever the income of any individual would be computed to be above the taxable income, the deductor will calculate the average rate of income tax based on rates in force as provided in Section 192. If the tax so calculated is below 20 per cent, deduction of tax will be made at the rate of 20 per cent and in case the average rate exceeds 20 per cent, tax is to be deducted at the average rate.
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