📚 CBDT Circular · Relief for deductors
Circular No. 9/2025 — Partial Modification of Circular No.3 of 2023 regarding consequences of PAN becoming inoperative as per Rule 114AAA
In plain English
If a person's PAN is 'inoperative' (not linked with Aadhaar), tax on their payments must be deducted at the higher rate, and deductors were getting short-deduction demands. This circular gives relief: where the PAN is made operative by the specified date, the deductor/collector won't be treated as in default for the earlier short deduction in the covered cases.
What it actually says
- Modifies Circular 3/2023 on the consequences of an inoperative PAN under Rule 114AAA.
- For amounts paid/credited in the specified window, if the payee's PAN becomes operative by the cut-off date, no higher-rate short-deduction demand is raised under Sections 206AA/206CC.
- Protects deductors from being treated as an assessee-in-default in these cases.
Who this affects & what to do
For deductors/collectors
If a payee's PAN was inoperative, ask them to link Aadhaar by the cut-off — you avoid the higher-rate demand.
For taxpayers
Link your PAN with Aadhaar to keep it operative, so your TDS/TCS isn't taken at the higher rate.
The law it touches
Section 139AA Rule 114AAA Section 206AA Section 206CC
The official document
📄
Read the official CBDT circular (PDF)Official CBDT circular No. 9/2025 — opens the official PDF on incometaxindia.gov.in.
📄 View the PDF ↗
Our explanation is a plain-language summary for general understanding, not advice on your specific matter.
The official CBDT copy prevails. © EaseValue Advisors LLP.
EaseValue