What rate of TDS applies if the deductee does not give a PAN?

If a deductee fails to furnish a valid PAN, you must deduct at the higher of 20% or the rate otherwise applicable to that payment, under Section 397(2) (earlier Section 206AA). For certain payments the floor can be higher.

An inoperative PAN (for example, one not linked with Aadhaar) is treated as no PAN, so the 20% rate revives. Capturing and validating PAN at vendor onboarding is the simplest way to avoid short-deduction defaults.

General information for FY 2026-27 under the Income-tax Act 2025, not advice on your specific case. Verify against the latest law or ask a CA before acting.