The last date to link PAN Aadhaar has been extended by the government to June 30, 2023, from March 31, 2023, with a penalty fee of ₹1000.
This means that from July 1, 2023, taxpayers will have to face certain consequences for the period the PAN remains inoperative.
- No refunds shall be issued against such PANs
- No interest on such a refund will be payable
- TDS & TCS deducted/collected shall be at a higher rate
However, the PAN can be made operative again in 30 days after payment of a fee of ₹1000
What is PAN?
PAN or Permanent Account Number is a 10-digit unique alphanumeric code issued by the Income Tax Department to all taxpayers. PAN is issued in the form of a card. PAN enables the department to identify/ link all transactions of the PAN holder with the department.
What is Aadhaar?
The aadhaar number is a 12-digit unique number issued by the UIDAI to the residents of India to provide a universal identity accepted across India.
Why link PAN Aadhaar?
- Government has made it mandatory: As per section 139AA of the Income Tax Act, which was introduced by the Finance Act 2017, it is compulsory to report Aadhaar for filing an Income Tax Return and for making an application for PAN allotment w.e.f 1st July 2017.
- Because Aadhaar holds all the information including biometrics, it simplifies and fastens the ITR processing & verification.
- Linking PAN Aadhaar will help the ITD to keep track of all transactions to prevent any fraud or tax evasion.
What if you don’t link PAN Aadhaar?
If PAN and aadhaar are not linked, one will have to face the consequences as mentioned below:
- PAN becomes inoperative
If PAN is inoperative, a taxpayer cannot file his ITR, claim any refund, etc. It will also hamper the accessibility of financial services, such as opening a bank account, or a Demat account, getting credit/debit cards, etc. Essentially PAN will not be useful wherever it is used. As a result, an individual will have to:
- Pay income tax & TDS at a higher rate
- Pay a penalty for not disclosing the PAN while making a financial transaction
- Penalty u/s 234H of ₹1000 of requesting to link PAN & Aadhaar up to June 30, 2023.
- Penalty us/ 272B of ₹10,000 for not furnishing PAN and hence not being able to comply with the provisions of section 139A.
While linking is the process for legal requirements, the method also benefits the government & taxpayers.
- Because the Aadhaar number is now required for most transactions these days, linking it to PAN allows the ITD to see a complete activity trail and quickly spot revenue leakages.
- Taxpayers can easily e-verify their returns without digital signatures. Also, they have access to their Income Tax Portal even with the Aadhaar number, as PAN Aadhaar is linked.
Here’s how you can Link PAN card with Aadhaar card : Step-by-step process - Learn by Quicko
Also, Check PAN Aadhaar Link Status Online | Quicko in order to avoid these consequences.
Have questions? Shoot’em here.