PAN and Aadhaar are unconnected? What does the extended deadline for TDS deductors’ penalties mean?

Aadhaar Card and PAN not connected? Dealing with taxpayers who were unable to connect their PAN and Aadhaar by the June 30, 2023, deadline has been made easier by the income tax department. The timeline for applying sanctions in certain situations has been loosened by the department.
People who lost their PAN because it was not linked were subject to higher rates of tax collection at source (TCS) or deduction at source (TDS).

For instance, the TDS on housing rent allowance, or HRA, went up to 20% for those whose PANs aren’t working.
Due to their ignorance of PANs’ inoperative state, several deductors and collectors continued to deduct or collect taxes at the lower rate, which resulted in fines from the income tax department.
According to a TOI article, the government has now loosened the restriction in response to many appeals from parties that were impacted. Presently, deductors and collectors are released from obligation for transactions completed until the end of March, provided that the PAN stops operating before the end of May.

“This is a big relief to several of those who were required to withhold or collect tax at a higher rate,” said Kuldip Kumar, a partner at Mainstay Tax Advisors. If the taxpayers haven’t already, they should connect their PAN with Aadhaar as soon as possible since, until then, they won’t get any refunds that are owed to them and would also lose interest on their tax refunds.