The Indian government mandated PAN and Aadhaar linking to curb black money in the economy and tackle tax evasion. The objective was to help the government track taxable transactions through a clear audit line, curb instances of multiple PAN Cards, and enhance transparency. Taxpayers who failed to complete PAN-Aadhaar linking by 30th June 2023 have several questions around the process. This article covers these FAQs to help offer a comprehensive understanding of the same.
Five key FAQs about PAN and Aadhaar linking
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Who needs to link PAN and Aadhaar
According to the provisions of Section 139AA of the Income Tax Act, all individuals who have been allotted a PAN (Permanent Account Number) on or before July 1st 2017 and who are eligible to obtain an Aadhaar Card are mandated to link their PAN and Aadhaar. In simple words, all taxpayers in India (who do not fall in the exempt category) are required to link their Aadhaar and PAN Cards to prevent it from becoming inoperative.
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Who is exempt from linking PAN and Aadhaar
The PAN-Aadhaar linkage regulation does not apply to the following categories of people:
- Residents of the states of Meghalaya, Assam, and Jammu and Kashmir.
- Non-residents as defined by the IT Act of 1961.
- Super senior citizens aged 80 years or more in the previous year
- Individuals who are not Indian citizens.
While the aforementioned categories of individuals do not have to link PAN and Aadhaar, they can opt to do so voluntarily. In that case, they can avail of the linking facility upon a certain fee payment.
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How to link my PAN and Aadhaar
Follow the steps mentioned below to link your PAN and Aadhaar:
Step 1: Log into the e-filing portal using your credentials.
Step 2: Click on the Link Aadhaar option listed in the profile section.
Step 3: Enter your PAN and Aadhaar number and click ‘Validate’.
Step 4: Input your name and mobile number and click the ‘Link Aadhaar’ option.
Step 5: Enter the six digit OTP received on your phone number and click the Validate button.
Your PAN-Aadhaar linking request will be sent to UIDAI for verification.
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How can I pay the penalty fee for delayed PAN-Aadhaar linking
If you are linking your PAN and Aadhaar after the 30th June 2023 deadline, you will be liable to pay a penalty charge before submitting the PAN-Aadhaar linking request. Here’s a step-by-step guide on how you can pay the penalty fee:
Step 1: Visit the e-filing portal.
Step 2: Click on the ‘e-Pay Tax’ option listed under Quick Links.
Step 3: Enter and confirm your PAN. Input your mobile number and click ‘Continue’.
Step 4: Input the OTP sent to your phone for verification and click on ‘Continue’.
Step 5: Tap the ‘Proceed’ button under the Income Tax tab.
Step 6: Fill in details about the relevant assessment year (e.g. 2025-2026). Choose ‘Other Receipts’ for type of payment and ‘Fee for delay in linking PAN and Aadhaar’ for sub-type of payment. Click Continue.
Step 7: The delay penalty charge of Rs. 1,000 will be auto-populated against ‘Others’. Click on the Continue button to pay the fee. You will receive a challan receipt upon successful payment.
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What happens if I don’t link PAN and Aadhaar
If you fail to link your PAN and Aadhaar by 30th June 2023, your PAN Card becomes inoperative. You cannot furnish or quote an inoperative PAN Card for various financial transactions that require PAN details like opening an FD of over Rs. 5 Lakhs with a bank or NBFC, investing in mutual funds, and purchasing life insurance. Failing to link your PAN and Aadhaar will also result in the following implications:
- You will not be allowed to file IT returns using an inoperative PAN.
- Any pending returns against your PAN will not be processed.
- No pending refunds against your PAN will be issued.
- TDS will be deducted at a higher rate due to an inoperative PAN.
If you have missed the stated deadline, you can still link your PAN and Aadhaar on the e-filing portal by paying a delayed linking fee of Rs. 1,000.
Conclusion
The five FAQs outlined above represent the key questions taxpayers ask about the PAN-Aadhaar linking mandate. These questions cover a variety of aspects to help you complete the linking process at the earliest. Remember once you link your PAN and Aadhaar, filing ITR also becomes as easy as shopping at an online marketplace.