Section 206AA – TDS on payments made to non-residents and residents not having PAN

A person receiving any amount, on which TDS is deductible under Chapter XVIIB shall furnish his PAN to the person responsible for deducting such tax. Tax shall be deducted at higher rates mentioned under Section 206AA, if PAN is not furnished by the recipient.

Rate of TDS:

A recipient who fails to furnish PAN to the person making a payment would suffer TDS at the higher of the rates mentioned below:

  • At the rate specified in the relevant provision of the Act;
  • At the rate or rates in force, i.e., the rate prescribed in the Finance Act.
  • At the rate of 20%


  • Declaration under Sec 197 shall not be valid unless PAN is furnished by the person. Sec 206AA shall hence apply. (Provisions of Sec 197 allow taxpayers a facility of nil or lower tax rate deduction of TDS or exemption of TDS subject to certain conditions).
  • The deductee shall furnish PAN to the deductor and both shall indicate the same in all invoices, bills, vouchers and correspondences which are sent to each other.
  • Where the PAN provided is invalid or does not belong to the deductee, it shall be deemed that PAN has not been furnished.
  • Where amount paid is below taxable limit and hence, not liable for deduction of tax; Section 206AA shall have no applicability even though PAN is not furnished.

TDS / TCS Compliance Reminder for September 2022

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