FD New Update: If you also invest in FD, then this news is for you. In fact, in case of non-linking of Aadhaar with PAN, it will not be allowed to submit Form 15G/H on bank FDs and TDS will be deducted at the rate of 20% instead of 10% on FDs.
If you have missed linking PAN with Aadhaar, then now your PAN number would have become in-active. In such a situation, if you have invested in Fixed Deposit ie FD, then the equation of return on it will deteriorate.
In case of non-linking of Aadhaar with PAN, submission of Form 15G/H on bank FDs will not be allowed and TDS will be deducted at the rate of 20% instead of 10% on FDs. If you have not been able to link Aadhaar with PAN till June 30, then now your PAN will be considered in-active i.e. in-valid. Means you have a PAN card, but now you will not be able to use it.
According to the HDFC Bank website, if PAN is not linked to Aadhaar, then from July 1, the PAN number will become in-operative and the bank customer will not be allowed to submit Form 15G/H. Higher TDS deduction will be applicable to the bank customer in case of in-operative PAN. If you get a return of more than Rs 40,000 (Rs 50,000 for senior citizens) on FD in a financial year, then in such a situation TDS deduction will be applicable on FD investment.
TDS on FD will be deducted at 20% if Aadhaar is not linked with PAN
If you have invested in FD, then you have to pay tax on the interest earned. According to Section 194A of the Income Tax Act, TDS is deducted at the rate of 10% if the interest earned on FD exceeds Rs 10,000 in a year. But if the PAN number given in the bank is not linked to Aadhaar, then TDS will be deducted at the rate of 20 percent even in case of having a PAN card. In fact, till June 30, if PAN is not linked to Aadhaar, according to the government order, it is considered to be in-active from July 1.
Please tell that there is some exemption for senior citizens and interest of Rs 50,000 on FD is tax free. Form 16A is seen to know how much TDS has been deducted on your FD interest. Bank issues quarterly interest certificate of FD in which you can find out about TDS deduction.
What will be the effect of FD without PAN?
Customers investing in FD without PAN are affected.
- If an annual return of more than Rs 40000 is received on FD, then TDS will be deducted at the rate of 20 per cent instead of 10 per cent on this interest.
- No TDS refund will be made by the Income Tax Department.
- According to CBDT circular no. 03/11, no TDS certificate will be issued by financial institutions like banks.
- Submission of Form 15G/H will not be allowed and other exemption certificates will be invalid. Penal TDS deduction will be applicable.
Why is PAN necessary for FD?
PAN is necessary to open an FD account when you make a time deposit of more than Rs 50,000 or more than Rs 5 lakh in a single financial. PAN will be necessary to open this FD in a banking company or a co-operative bank, in a post office or in a non-banking financial company.
