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Tax Solutions

Monday, October 18, 2010
By Anand Tibrewala

TDS will be deducted if PAN number is not furnished

Q-1) I am a senior citizen aged 80 plus. I retired almost 25 years back from a government job. I survive on my pension and interest from senior citizen bonds, Bank FD interest and MIS interest. I do not have a PAN No. since I do not have a taxable income. Till last year all the authorities were accepting declaration for non deduction of TDS. However, from current year all of them have started asking for PAN No. else they would deduct TDS @ 20% from my interest income. Please explain why so?
Manoj Tiwari, Malad

Ans : It is true that till last year the declaration would suffice for non deduction of TDS. From current year it has been made mandatory that irrespective of the total income all assessee need to furnish their PAN No. If PAN No is not furnished the rate of TDS is 20% p.a. out of the said income. This has been done to verify the payments and receipts. Hence, only declaration would not suffice and at this juncture of your life you must obtain a PAN No. Along with your PAN No. you can file the respective declaration to avoid TDS.

Q-2) Who is required to register for TDS Deduction?
Radha Singh, Grant Road

Ans : All assessee other that individual and Hindu Undivided Family(HUF) need to register themselves for TDS deduction from the beginning, if they are likely to make payments for certain expenses, which are covered by TDS provisions. Individual and Hindu Undivided Family, if they are carrying on a business and their accounts are subjected to Tax Audit under the Income Tax Act, 1961 for a financial year, then from next financial year they need to register for TDS deduction and start deducting TDS from the beginning of the financial year itself.

Q-3) I have a house in my name and have taken a housing loan on the same. I have received another house from my parents under a will during the current financial year. Please explain the tax implication of having more than one property.
Parab Sinha, Andheri

Ans : In the circumstances described you own two properties (houses). Out of the two, if one is self occupied by you and the other is not, then the self occupied property does not attract any income tax. However, the other, would be deemed to have been let out by you and fair market rent would be taken as the rent income and you will have to pay tax on the said deemed income. Alternatively if the second property is rented by you then the actual rent received would be subject to income tax.

Under Wealth Tax Act one self occupied house is tax free and is not subjected to wealth tax. However, the second house would attract wealth tax liability. You shall have an option to claim exemption of one property from wealth tax i.e. the property having higher value can be claimed exempted. If, the value of the other house, along with other taxable assets exceeds the minimum basic exemption, then wealth tax needs to be paid by you.

(The Author is a CA and specializes in taxation matters. He is a Senior Partner at the leading Chartered Accountancy firm, AD & Company)

If you have any Tax Query email it to us at and we will find you a solution.



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