CBDT Circular No. 9/2025 on PAN inoperability and TDS/TCS Compliance

At Vishnu Daya & Co. LLP, we believe in keeping you well-informed about the latest regulatory developments, always striving to ease your compliance journey with care, clarity, and diligence.

The Central Board of Direct Taxes (CBDT) has issued Circular No. 9/2025 dated July 21, 2025 (attached herewith for all of your perusal and records), providing much-needed relief to deductors and collectors in cases where PANs of deductees/collectees were rendered inoperative due to non-linkage with Aadhaar.

Key Highlights of the Circular:

1. Relief from Default in Short Deduction / Collection of TDS/TCS
   • This relief applies where the deductor/collector has deducted/collected tax at a lower rate considering PAN, but the PAN was found to be inoperative at the time of transaction.

2. Scenarios Covered:
   • Where the amount is paid or credited from 01.04.2024 to 31.07.2025 and the PAN is made operative (as a result of linkage with Aadhaar) on or before 30.09.2025
   • Where the amount is paid or credited on or after 01.08.2025 and the PAN is made operative (as a result of linkage with Aadhaar) within two months from the end of the month in which the amount is paid or credited

3. Benefit of the Circular:
   • In such cases, no penalty proceedings or demand for short deduction/collection will be pursued if the above conditions are met.

Immediate Action Points:

1. Review all TDS/TCS deductions and collections made from April 1, 2024, onwards.
2. Identify cases where PANs of deductees/collectees were inoperative at the time of deduction/collection.
3. Communicate proactively with the concerned deductees/collectees and encourage them to complete PAN-Aadhaar linkage before the stipulated dates.
4. Maintain documentation of corrective actions and communication for audit and compliance purposes.

Kindly let us know for anything in this regard.