Non-resident referred to in Section 194LC will not be penalised for not having a PAN

By virtue of Section 206AA, if PAN of the recipient is not available, tax is deductible either at the normal rate or at the rate of 20%, whichever is higher.

However under the amended provisions of Section 206AA, in respect of payment of interest on long-term infrastructure bonds to a non-resident (as referred to in Section 194LC), tax will be deducted at the normal rate of 5%, even if the non-resident-recipient does not have PAN.