For a variety of financial transactions and tax-related purposes, the government has made it mandatory to link Aadhaar Card and PAN card. By adhering to this requirement, individuals can ensure legal compliance and avoid potential penalties. Both Aadhaar and PAN are essential identification numbers in India's financial system.
Aadhaar is a 12-digit unique identity number that is issued by the Unique Identity Authority of India (UIDAI). It serves as a vital identity proof for all Indian residents, enabling access to various government services and schemes.
While PAN, which stands for Permanent Account Number and is assigned by Income Tax Department, is a ten-character alphanumeric code. It primarily required for people in with financial transactions and processes related to taxes.
Requirement of Linking of PAN & Aadhaar
The requirement for linking PAN with Aadhaar for resident Indians was introduced in July 2017. This came about through an amendment to the Income Tax Act with the introduction of Section 139AA. While the initial introduction came with a deadline, there have been several extensions provided over the years. In June 2022: Deadline further extended to June 30, 2022. Penalty for linking after this date increased to Rs. 1,000. June 2023: Final extension provided, with June 30, 2023, being the new deadline. PAN cards became inoperative if not linked by this date.
Implications Of Non-Compliance of Linking
- Higher TDS/TCS Rates: If your PAN status is marked as 'Inoperative', you will be subject to higher rates of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source).
- Inoperative PAN: Not linking PAN with Aadhaar will render the PAN inoperative. This means that you will not be able to conduct financial transactions where quoting of PAN is mandatory. This includes opening a bank account, applying for a loan, and filing income tax returns.
- Penalty and Compliance Issues: There may be penalties for non-compliance, and you may face difficulties in receiving refunds and other tax-related benefits.
For more details visit Income Tax Department.
Effects of Non Linking of PAN - Aadhar
- Difficulties in Conducting Financial Transactions in India
- Higher TDS/ Withholding Taxes
- Difficulty in Banking
- Refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made to him
For whom was Aadhaar-PAN linkage not compulsory?
Aadhaar-PAN linkage requirement does not apply to any individual who is:
- Residing in the States of Assam, Jammu and Kashmir, and Meghalaya;
- A non-resident as per the Income-tax Act, 1961;
- Of the age of eighty years or more at any time during the previous year; or
- Not a citizen of India.
Can an NRI apply for Aadhaar? Yes. An NRI (whether minor or adult) with a valid Indian Passport can apply for Aadhaar from any Aadhaar Enrolment Centre. In case of NRIs the residential condition of 182 days is not mandatory.
Source: Income Tax Department and UIDAI.
What is to be done if I am an NRI and my PAN is still Inoperative
The NRIs whose PANs are inoperative are requested to intimate their residential status to their respective JAO along with supporting documents with a request to update their residential status in the PAN database. Details of JAO can be found at Income Tax India.
How can I see my PAN Status
Steps to Check PAN-Aadhaar Linking Status:
- Visit the Income Tax e-Filing Website: Go to the official Income Tax e-Filing portal at incometaxindiaefiling.gov.in.
- Link Aadhaar Status: Once on the website, look for the 'Quick Links' section or a similar menu where you can find the 'Link Aadhaar Status' option.
- Enter PAN and Aadhaar Number: You will need to provide your PAN and Aadhaar numbers. Once entered, submit the details to view the status of the linkage.
- View Status: After submitting the details, the website will display the current status of the linkage between your PAN and Aadhaar.