All deductors are liable to deduct tax at the higher rate in all transactions not having PAN of the deductees on or after 1st April 2010. In order that there is no dispute regarding quoting / non-quoting of PAN or accuracy thereof, the law requires all deductees and dedutors to quote PAN of deductees in all correspondences, bills, vouchers and other documents sent to each other. All deductors are, therefore, advised to intimate their deductees to obtain and furnish their PAN so as to avoid TDS at a higher rate. All deductees, including non-residents having transactions in India liable to TDS, are advised to obtain PAN by 31st March 2010 and communicate the same to their deductors before tax is actually deducted on transactions after that date.
The procedure for obtaining PAN is simple, inexpensive and quick. Application for PAN can be filed in Form 49A to National Securities Depository Ltd. (NSDL) or Unit Trust of India Investor Services Ltd. (UTIISL) or their intermediaries. Non-residents can apply through the local embassy / consulate of India.
What To do Now
On the basis of New section 206AA ,it is now necessary for persons who are submitting Form 15H and 15G and does not have a PAN ,they must have PAN and should mention the PAN on form 15H/15G.
So even you have income less than taxable income ,or in case of senior citizen tax is not payable on total income even then they have to apply for the pan .As the new clause is applicable from 01.04.2010 so such person should apply for new PAN before 01.04.2010 to avoid deduction of TDS and i.e also at Maximum rate of 20%..
Maximum Rate applicable on Invalid Pan also:One more point all deductor should note that these provisions are also applicable where pan provided by deductee is Invalid .so its deductor responsibility to ensure that pan provided by the deductee is valid and correct .(read more here)
Further it is clarified that Higher TDS doesn't means higher income tax .Means its a Just with holding of amount and even in these type of cases assessee can file his return and can claim refund from income tax department .But to claim the refund PAN is required ,so it is advisable to all my friend ,who may fall under this provisions to apply for pan and avoid TDS as you know that there may be some difficulties and problem to get refund from Income tax Department .
LATEST TDS RATE (FY 2010-11) IS AVAILABLE HERE
New provision is given below