PAN Aadhaar Link Penalty And What Happens If Pan Card Is Not Linked To Aadhaar Card?

The Permanent Account Number (PAN) card and Aadhaar card are critical identification documents for Indian citizens. The Income Tax (IT) department issues the PAN card, while the Unique Identification Authority of India (UIDAI) issues the Aadhaar card. 

PAN is a unique identification number issued to individuals and businesses for tax purposes. The Aadhaar number is a 12-digit unique identification number issued for all residents. However, the IT department has made linking PAN and Aadhaar cards mandatory. 

Latest Update

The last date for linking Aadhaar with PAN was 30th June 2023. PAN will become inoperative from 1st July 2023 if it is not linked with Aadhaar.

The Income Tax Department has issued a reminder to taxpayers to link their PAN with Aadhaar by 31st May 2024 if they have not yet linked them. The reminder also states that if the PAN - Aadhaar linking is not completed within 31st May 2024, it will lead to tax deduction/ collection (TDS/ TCS) at a higher rate under Sections 206AA and 206CC of the Income Tax Act, 1961. This is because of using an inoperative PAN for transactions entered into before 31 March 2024.

Thus, if you have not linked your PAN card with your Aadhaar, your PAN card will be inoperative and you will not be able to provide your PAN number for financial transactions. However, you can still apply for linking your PAN with your Aadhaar even now after paying the penalty and your PAN card will be operative within 30 days. Read on to know more.

Circular on PAN-Aadhaar Linking

Section 139AA: This section mandates that linking of PAN with Aadhar is mandatory for all taxpayers to provide the Aadhar card details when filing their income tax returns.

The IT department issued a circular that it is mandatory for all PAN-holders (except those who fall under the exempt category) to link their PAN-Aadhaar within 30th June 2023. Initially, the IT department mandated to link PAN-Aadhaar by 31st March 2022 and then extended it to 30th June 2022. However, people who linked their PAN-Aadhaar between 1st July 2022 to 30th June 2022 had to pay a fine of Rs.500.

Subsequently, the IT department extended the last date to link PAN-Aadhaar to 30th June 2023. PAN holders who link PAN-Aadhaar between 1st July 2022 to 30th June 2023 must pay a penalty of Rs.1,000. PAN card will become inoperative from 01st July 2023 if PAN holders do not link it with their Aadhaar card.  The IT department had further extended the deadline till 31st May 2024, failure to link before this deadline will result in deduction of TDS at higher rates. The IT department has mandated linking PAN-Aadhaar to regulate and curb tax evasion. 

Who falls under the exempt category for PAN-Aadhaar linking?

The exempt category people need not link PAN-Aadhaar within 30th June 2023. The exempt category is as follows:

• Individuals residing in the states of Jammu and Kashmir, Assam and Meghalaya.
• A non-resident taxable person as per the Income-tax Act, 1961.
• People aged more than 80 years (Super Senior Citizens).
• Persons who are not citizens of India.

Last date to link PAN with Aadhaar card

The last date for PAN-Aadhaar linking is 30th June 2023. PAN cards not linked with Aadhaar will become inoperative after 1st July 2023.

‘My PAN-Aadhaar is not linked yet, what to do now?’

If you still have not linked the PAN-Aadhaar. Your PAN status will be shown as Active but inoperative and your service recipients will be doing higher tax deductions. No need to worry, you can still link them by paying a fine of Rs.1000, within 7-30 days your PAN status will be Active and operative and you will have all your TDS credits showing in your Form 26AS and you can rightly claim them while filing taxes. The process to link PAN-Aadhaar after the deadline is provided in detail below.

Importance of linking PAN with Aadhaar card

• The PAN card of a person will become inoperative when it is not linked to an Aadhaar card.
• PAN-Aadhaar linking is required when filing the Income Tax Return (ITR). The IT department may reject the ITR when PAN and Aadhaar are not linked.
• PAN and Aadhaar cards are required to be submitted to get government services, such as applying for a passport, obtaining subsidies and opening a bank account. Thus, it is difficult to access government services when PAN and Aadhaar cards are not linked.
• When the PAN-Aadhaar is not linked, getting a new PAN card may be difficult if the old one is damaged or lost since it is mandatory to mention the Aadhaar card number while applying for a new PAN card.

Consequences of not linking PAN with Aadhaar card

When the PAN-Aadhaar cards are not linked within the last date, it becomes inoperative as a result of which:

• Taxpayers cannot file ITR or claim refunds with inoperative PAN cards.
• The pending returns will not be processed, and pending refunds will not be issued to inoperative PAN cards.
• The TCS/TDS will be applicable at a higher rate.
• The TCS/TDS credit will not appear in Form 26AS, and TCS/TDS certificates will not be available.
• Taxpayers will be unable to submit 15G/15H declarations for nil TDS.
•  The following transactions cannot be done since the PAN card will be inoperative:
  • Open a bank account.
  • Issue of debit/credit cards.
  • Purchase of mutual funds units.
  • Cash deposit with a bank or post office during a day exceeding Rs.50,000.
  • Purchase of a bank draft or pay order in cash exceeding Rs.50,000 in a day.
  • A time deposit with banks, Nidhi, Non-Banking Financial Corporations (NBFCs), etc., exceeding Rs.50,000 or aggregating to more than Rs.2,50,000 during a financial year.
  • Payment for one or more prepaid payment instruments as defined by the Reserve Bank of India (RBI) through bank draft, pay order or banker’s cheque aggregating to more than Rs.50,000 in a financial year.
  • Sale or purchase of goods or services by any person more than Rs.2,00,000 per transaction.
  • All bank transactions exceeding Rs.10,000.

However, the PAN can be made operative again in 30 days, upon intimation of Aadhaar number to the prescribed authority after payment of fee of Rs.1,000.

Penalty for non-linking of PAN with Aadhaar card

The taxpayers who have not linked their PAN-Aadhaar within the last date of 30th June 2023, can do so by paying a late penalty of Rs.1,000. They must pay the penalty before filing for the PAN-Aadhaar link on the Income Tax website. However, they need to ensure they have a valid PAN number and Aadhaar number to pay the penalty.

How to activate inoperative PAN card and link with Aadhaar card?

When the PAN card is not linked with the Aadhaar card, it becomes inoperative. However, you can re-activate your PAN card by first paying the penalty for non-linking PAN with an Aadhaar card and then applying to link PAN with Aadhaar card.

Follow the below steps to pay the penalty for re-activating an inoperative PAN card:

Step 1: Visit the Income Tax e-Filing Portal.

Step 2: Click the ‘e-Pay Tax’ option under the ‘Quick Links’ heading.

Step 3: Enter the ‘PAN’ number under ‘PAN/TAN’ and ‘Confirm PAN/TAN’ column, enter mobile number and click the ‘Continue’ button.

Step 4: After OTP verification, it will be redirected to e-Pay Tax page. Click the ‘Continue’ button.

Step 5:  Click the ‘Proceed’ button under the ‘Income Tax’ tab.

Step 6: Select Assessment Year as ‘2024-25’ and ‘Type of Payment (Minor Head)’ as ‘Other Receipts (500)’ and select ‘Fee for delay in linking PAN with Aadhar’ and click the ‘Continue’ button.

Step 7: The applicable amount will be pre-filled against ‘Others’ option. Click ‘Continue’ button and make the payment.

You can pay the late penalty on Income Tax e-filing Portal through net banking, debit card, over the counter, NEFT/RTGS or payment gateway option. However, you can pay the penalty through the payment gateway option when you have a bank account with the following authorised banks:

• Axis Bank
• Bandhan Bank
• Bank of Baroda
• Bank of India
• Bank of Maharashtra
• Canara Bank
• Central Bank of India
• City Union Bank
• DCB Bank
• Federal Bank
• HDFC Bank
• ICICI Bank
• IDBI Bank
• Indian Bank
• Indian Overseas Bank
• IndusInd Bank
• Jammu & Kashmir Bank
• Karur Vysya Bank
• Kotak Mahindra Bank
• Karnataka Bank
• Punjab & Sind Bank
• Punjab National Bank
• RBL Bank
• South Indian Bank
• State Bank of India
• UCO Bank
• Union Bank of India 

After making the payment, proceed to link your PAN with Aadhaar card.

How to link a PAN with an Aadhaar card after deadline?

Taxpayers can link their PAN with their Aadhaar after four to five days of paying the penalty by following the steps below:

Step 1: Go to the Income Tax e-filing portal.

Step 2: Under the ‘Quick Links’ heading on the left-hand side of the homepage, click on the ‘Link Aadhaar’ option.

Step 3: Enter the ‘PAN’ and ‘Aadhaar Number’ and click the ‘Validate’ button.

Step 4: A pop-up message stating ‘Your payment details are verified’ will appear when the penalty payment has been verified. Click the ‘Continue’ button to submit the linking request.

Step 5: Enter the required details and click the ‘Link Aadhaar’ button.

Step 6: Enter the OTP received on the mobile number.

Step 7: The request to link the PAN-Aadhaar card will be successfully submitted. 

A taxpayer can also visit a PAN card centre, fill out the appropriate form and submit it with photocopies of PAN and Aadhaar cards for PAN-Aadhaar linking.

The PAN card will be linked with your Aadhaar card and become operative within 7-30 days of applying for PAN-Aadhaar card linking. Once the PAN card becomes operative, it can be used for various transactions, including filing your ITR and claiming TDS refunds.

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