PAN to become inoperative after March 2023 if not linked to Aadhaar

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NEW DELHI :

PAN which is not linked to Aadhar will become inoperative after March 2023, the Income Tax department informed on Wednesday. They also said that non-linking of PAN with Aadhaar by March 31 would attract penalty of up to 1,000. This PAN will however, remain functional for a year before getting inoperative next year. 

The Central Board of Direct Taxes (CBDT) has extended the deadline for linking Permanent Account Number (PAN) with Aadhaar many times and the last date now is March 31, 2022.

PAN, not linked to Aadhaar, would become “inoperative” after March 31, 2023, according to CBDT’s circular. Those taxpayers who link their PAN with biometric Aadhaar by 30 June, 2022, would be required to pay late fees of 500. Beyond that, the penalty would rise to 1,000.

In order to mitigate the inconvenience to taxpayers, as per notification dated March 29, 2022, a window of opportunity has been provided to taxpayers up to March 31, 2023 to intimate their Aadhaar to the prescribed authority for Aadhaar-PAN linking without facing repercussions, the CBDT said, adding such intimation would have to be accompanied by late fees.

“However, till 31st March, 2023 the PAN of the assessees who have not intimated their Aadhaar, will continue to be functional for the procedures under the Act, like furnishing of return of income, processing of refunds etc,” the CBDT statement said.  

After 31 March, 2023, the PAN of taxpayers who fail to intimate their Aadhaar, as required, shall become inoperative and all the consequences under the Act for not furnishing, intimating or quoting the PAN shall apply to such taxpayers, the CBDT added.

As per data available, till 24 January, 2022, more than 43.34 crore PANs have been linked with Aadhaar. Over 131 crore Aadhaar cards have been issued so far. PAN-Aadhaar linkage would help in eliminating duplicate PAN and curbing tax evasion.

AKM Global, Tax Partner, Amit Maheshwari said “It is advisable for taxpayers to check their income tax portal and ensure that Aadhaar and PAN are linked. NRIs may have some concerns since in some cases they do not have Aadhaar.”

Nangia Andersen LLP Partner Neeraj Agarwala said, while PAN is used for various transactions like opening a bank account, purchase of immovable property or proof of identity, inactive PAN will trigger domino effect and individual who have not linked their Aadhaar may face multiple challenges.

“Once your PAN becomes inactive, the person will be restricted from doing financial transactions (where quoting of PAN is mandatory like mutual funds), subjected to TDS at higher rates and penalty under section 272B,” Agarwala said.

For those who do not have access to income tax portal, the linking process is made available through SMS also, he added. 

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