Relaxation From Higher Withholding For Non-Residents In Absence Of Pan

Section 206AA of the Income-tax Act, 1961 (‘the IT Act’) provides that payee entitled to receive any sum or income, on which tax is deductible at source, shall furnish PAN (Indian tax identification number) to payer of such sum or income. In case of failure to furnish PAN, tax is withheld at higher of rate provided under the IT Act or rates in force (i.e. as per Tax Treaty) or 20%.