Those who fail to link their PAN to Aadhaar by 30 June 2022 will have to pay a fine of Rs 500. If it’s still not done by 31 March 2023, your PAN will become inoperative
The PAN-Aadhaar linking deadline has been extended to March next year. PTI
It is time to no longer ignore the reminders to link your PAN (Permanent Account Number) to your Aadhaar. The government has extended the deadline to link the two important personal identification cards to 31 March 2023, but if you have not yet done the needful you will be penalised.
Why do we need to link the PAN and Aadhaar?
While the PAN-Aadhaar linking deadline has been extended to next year, those who have yet to do the linking have to pay a penalty of Rs 500. A penalty of Rs 500 is to be paid “in a case where such intimation is made within three months from the date referred to in sub-section,” that is by 30 June 2022. Beyond that, one has to pay a fine of Rs 1,000, according to the latest circular by the Central Board of Direct Taxes (CBDT), a body that looks into direct taxes.
On 30 March, CBDT introduced a sub-section (2) under section 139AA. The new guidelines came into effect on 1 April 2022.
CBDT said in a 31 March circular that “the Finance Act, 2021 inserted a new section 234H in the Act to complete the process of PAN-Aadhaar linking for identifying bogus PANs. This section provides that where a person who is required to intimate his Aadhaar under subsection (2) of section 139 AA fails to do so on or before a notified date, he shall be liable to pay a fee not exceeding a sum of one thousand rupees, as may be prescribed, at the time of making intimation under sub-section (2) of section 139AA after the said date.”
What happens if the PAN-Aadhaar are not linked?
In case of failure to link the two cards by 31 March 2023, the PAN allotted to the person shall be made inoperative, the CBDT said. It stated that rule 114AAA of the Income Tax (I-T) guidelines provides that if the PAN of a person has become inoperative, he will not be able to furnish, intimate or quote his PAN and shall be liable to all the consequences under the Act for such failure.
If the PAN becomes inoperative, the consequences are as follows:
1. The person shall not be able to file returns using the inoperative PAN
2. Pending returns will not be processed
3. Pending refunds cannot be issued to inoperative PANs
4. Pending proceedings as in the case of defective returns cannot be completed once the PAN is inoperative
5. Tax will be required to be deducted at a higher rate as PAN becomes inoperative
The taxpayer is likely to face difficulty at banks and while using other financial portals, as PAN is one of the important KYC criteria for all financial transactions.
Why does the government want the PAN-Aadhaar to be linked?
Since 2017, the government has been urging citizens to link their PAN to their Aadhaar. From 1 April 2017 onward, the government introduced 139AA in the Income Tax Act which makes it mandatory for a taxpayer to quote their Aadhaar in the application form for PAN and return of income.
The I-T department’s decision to make the linking of the two documents necessary was to avoid duplication or bogus PANs. It was brought to notice that multiple PANs had been allotted to one person or one PAN is allotted to more than one person and hence the IT department took steps to avoid further duplication.
With inputs from agencies
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