The deadline for linking PAN (Permanent Account Number) and Aadhaar is fast approaching, with significant implications for taxpayers who fail to meet it. Starting from July 1, 2023, the PAN of individuals who have not linked it with Aadhaar as required will be deemed inoperative.
Initially, the deadline for linking PAN-Aadhaar was set for 31st March 2022, but it was later extended to 30th June 2022. However, individuals who linked their PAN-Aadhaar between 1st July 2022 and 30th June 2022 were required to pay a fine of Rs. 500.
Subsequently, the IT department further extended the deadline to link PAN-Aadhaar to 30th June 2023. Individuals who link their PAN-Aadhaar between 1st July 2022 and 30th June 2023 will be subject to a penalty of Rs. 1,000.
What are the implications of missing the deadline?
If the PAN-Aadhaar linking is not completed by the June 30, 2023 deadline, the PAN status will be considered inoperative. Consequently, several consequences will arise:
Inoperative PAN: An inoperative PAN implies that you cannot use it for financial transactions, provide it for verification purposes, or quote it in any documentation.
No refunds: If your PAN becomes inoperative, you will not be eligible for any refunds, whether it be for income tax paid or any other applicable refunds. This can result in financial loss and inconvenience.
Non-payment of interest on refunds: During the period in which your PAN remains inoperative, you will not receive any interest on eligible refunds. This further impacts your financial situation and can lead to a loss of potential income.
Higher TDS and TCS rates: The inoperative status of your PAN will lead to the deduction or collection of TDS and TCS at higher rates. This means that more tax will be withheld from your income, affecting your cash flow and potentially increasing your overall tax liability.
Financial and tax challenges: Filing income tax returns (ITR) becomes difficult as the Income Tax Department may reject your application if the PAN-Aadhaar linkage is missing. This rejection can hinder the processing of tax refunds and lead to potential penalties.
Limited government services: Not linking PAN with Aadhaar can restrict access to government services that require PAN for identity verification. This may impact activities such as availing subsidies, applying for a passport, and opening a bank account.
Issuing a new PAN card: In cases where your PAN card is lost or damaged, obtaining a new one without the PAN-Aadhaar linkage can become challenging. The government has made it mandatory to provide the Aadhaar card number when applying for a new PAN card.
What steps should you take?
To avoid the implications of missing the PAN-Aadhaar linking deadline, follow these steps:
Link PAN with Aadhaar: Visit the official e-filing portal of the Income Tax Department and follow the prescribed procedure to link your PAN with Aadhaar. Ensure that you have the necessary details handy, such as PAN card, Aadhaar card, and other required information.
Pay late fee (if applicable): If you missed the earlier deadline, i.e., June 30, 2022, a late fee of ₹1,000 is applicable. Make the payment through the e-Pay tax feature provided on the e-filing portal. It is advised to verify the authorized banks for payment via the e-Pay tax facility.
It is crucial to understand the consequences and take prompt action to link your PAN with your Aadhaar before July 1, 2023. If you encounter difficulties or have questions regarding the linking process, seek assistance from tax professionals or visit designated PAN centers for guidance and support.