tax deduction without Pan number

[Former Member]

Hi Expert,

If i update pan no detail in IT185 it deduct the tax , where as if i dont update pan no details it doesn't deduct the TAX.

where as my client doesn't want to update the pan detail but tax should be deducted for the employee. how do i do that ?

Thanks in advance

[Former Member]

Tax deduction is purely based on income earned by employee.

As per IT act, if employee fails to produce PAN details, tax will be deducted 20% or 30% flat based on income.

So it is mandatory to maintain PAN details in IT 185 for properly tax deduction and further reporting (FORM 16/16A, 24).

But you may restrict this automatic deduction by maintaining voluntary tax deduction wage type MTV1 by assigning notation amount 0.01 Rs.....but u can do this till feb i believe... in march...u will face prb..

[Former Member]

Our client is sending the tax report every month to Income tax department so they dont want to enter the PAN number every month

[Former Member]

sheeba...

PAN is the legal binding....advise your client to mandatory maintain PAN number for all. Refer section 206AA...

This will help them in proper tax deduction and tax reporting without any hassle.

If they fails to do so, they will have to do many manual workings for tax and maintain data.

[Former Member]

yes i understand , is any configuration without pan number updation but tax should get deducted .

[Former Member]

Whether u maintain PAN or NOT, tax will be deducted but it differs based on the data maintenance.

With PAN - As per tax slabs

Without PAN - Flat 20 or 30% tax on income earned, even though the individual does not fall under taxable bracket....

we faced similar issue in my ex client...50% of their employees dont have PAN. So they started asking PAN from everyone after implementation, MTV1 wage type they used to avoid any excess tax ded..

why is your client does not want have PAN details.??

you decide and advise best solution. all the best.

[Former Member]

Hi expert,

Thank u for ur response , here the issue is suppose new employee joins a company with salary more than 2 lakhs without the availability of pan number where as his/her tax should be deducted without the the pan number . how do i resolve this

thanks in advance

[Former Member]

Hi,

As per Statutory law you have to maintain pan number dude, or else tax will be ded more in percentage.

If your client want to maintain pan number and want tax to be deducted then my suggestion is disabale income tax from schema and create costume IT 0014 as Income tax type and give the manual amount.

Thanks

Vibin

[Former Member]

Dear Sheeba,

if you are not update the pan details in185 the system will deduct the 20% of tax for employees who comes in the tax bracket. i.e. if the employee is above 800000/- then it will deduct up to 800000/- 20% and above it will be 30%. so pan no is mandatory for the employees who comes in the tax bracket.

it is advisable to update pan details. it is necessary for preparing Form 16.

i think you can put dummy no for all employees to deduct the tax as per law but it will reflect in form16.

John

[Former Member]

Hi Sheeba,

If you dont not maintain pan details in 185 IT it will deduct 20% tax on salary, if you maintain it will deduct as per law.

With Regards

Venkey Boyini