CBDT’s Circular No. 3/2023 had stated that Permanent Account Numbers (PANs) not linked with Aadhaar would become inoperative from July 1, 2023, attracting higher TDS/TCS rates under sections 206AA/206CC. Circular No. 6/2024 provided temporary relief to deductors/collectors if PANs were made operative by May 31, 2024.

However, many deductors/collectors still received default notices for “short deduction/collection” where PANs were inactive at the time of transaction but later became operative. This circular addresses those concerns.

CBDT has partially modified Circular No. 3/2023 and granted the following relief:

1. For transactions from April 1, 2024 to July 31, 2025:
   No liability for higher TDS/TCS under Sections 206AA/206CC if PAN is made operative by September 30, 2025 (i.e., through Aadhaar linkage).
2. For transactions from August 1, 2025 onward:
   No liability for higher TDS/TCS if PAN becomes operative within two months from the end of the month in which payment or credit was made.

This means that deductors/collectors will not be treated as defaulters under sections 200A or 206CB in the above cases.

Note: All other provisions of Chapter XVII-B or XVII-BB for TDS/TCS shall still apply in the aforesaid two cases.