Monday, 17 May, 2010

No PAN? Be prepared for greater TDS!


No PAN? Be prepared for greater TDS!

Take a look at this press release from the Income Tax Department:
I've got some objections to this:
  • People who are really rich and straightforward will anyway have PAN and declare it. This circular is irrelevant for them
  • People who are really rich and unscrupulous will anyway have PAN and find ways to take care of taxes. This circular is irrelevent for them
  • People who are really rich, unscrupulous and deviant will probably not have PAN or have multiple PANs or have benami PAN-holders, etc., and will know how to get around the system - either the right way or otherwise - This circular is irrelevant for them
  • People who are part of the middle class (especially the salaried class) will be sufficiently scared of the Big Brother - IT authorities - And will be meticulous about declaring their PAN - This circular is irrelevant for them
  • People who are poor / low-income folks are unlikely to be in the taxable bracket. However, occasionally / rarely, they may receive some big bucks - by their standards - from relatives / friends / government / well wishers, etc., which they may choose to invest in a fixed deposit with the bank for taking care of some specific major future commitment (Say, a marriage or medical emergency or higher education for an only child) - The interest amount on the same may cross the limit applicable for TDS, but their own Annual income may very well be well below the tax exemption limit. - This circular is likely to be applicable to such individuals, and while it is actually quite irrelevant for them, it nevertheless succeeds in harassing them by forcing them to get a PAN or lose "significant" money unnecessarily.
A typical example would illustrate this point. Let's say, a watchman & his housemaid wife have a combined monthly income of Rs. 10,000/= out of which they save Rs. 2000/= per month for the higher education of their only child. After a couple of years, the interest income on these deposits would be over the limits prescribed for deduction of TDS. However, the bank manager will tell them to produce a PAN card or simply accept a TDS, that too @ 20%! If this is the intended consequence of the press release, I wonder why our Left parties and BJP folks are keeping quiet about it - or for that matter vociferous people like our very own Rahul Gandhi, Mamata Didi, Kalaignar Karunanidhi, etc.!!! Whatever happened to the poor Aam Aasmi???

Regards,

N

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