Haven’t Linked your PAN with Aadhaar? Know the Consequences

Aadhaar number is a 12-digit random number issued by the UIDAI. Every resident is entitled to obtain an Aadhaar number by submitting his demographic information and biometric information by undergoing the process of enrolment. An NRI (whether minor or adult) with a valid Indian Passport can also apply for an Aadhaar.

Income-tax Act has made it mandatory for every person who has been allotted PAN and eligible to obtain an Aadhaar number to intimate his Aadhaar number to the Income-tax Department. In case a person fails to do so, the PAN allotted to him shall become inoperative after the notified due date. The due date for linking PAN with Aadhaar had been extended on multiple occasions, and the latest date is 30-06-2021.

If a person fails to link his PAN with Aadhaar by the due date, he has to face the following consequences:

No interchangeability of PAN with Aadhaar

Income-tax Act allows the interchangeability of Aadhaar with PAN, i.e., a person is allowed to quote his Aadhaar where PAN is required to be quoted or vice versa. However, the interchangeability of PAN and Aadhaar is allowed only if:

• 1. Assessee has linked his PAN with Aadhaar; or
  2. He does not have a PAN, but he has an Aadhaar.

Thus, if the PAN becomes inoperative due to non-linking with Aadhaar, he won’t be able to use it in lieu of PAN.

Penalty under Section 234H

If a person fails to intimate his Aadhaar by 30-06-2021, he shall be liable for payment of a fee up to Rs. 1,000 under Section 234H at the time of linking his PAN with Aadhaar.

PAN will become inoperative

Rule 114AAA provides that where a person is required to furnish, intimate, or quote his PAN, and his PAN has become inoperative, it shall be deemed that he has not furnished, intimated, or quoted the PAN. Consequently, he shall be liable for all the consequences for not furnishing, intimating, or quoting the PAN. Some of these consequences are:

1. The tax shall be deducted at a higher rate in accordance with Section 206AA;
2. The tax shall be collected at a higher rate in accordance with Section 206CC;
3. Taxpayers will not be able to file the return of income. Consequently, he shall be liable for the consequences of non-filing of a return, inter-alia, payment of late fee under section 234F, interest under section 234A, forfeiture of current year’s losses, best judgment assessment, the penalty for concealment of income, prosecution for failure to furnish return of income, so on and so forth;
4. A penalty under Section 272B shall be levied as such a person shall not be able to comply with the provisions of Section 139A requiring him to quote his PAN in certain financial transactions, etc.

Dive Deeper:
Aadhar Card (आधार कार्ड) – Get Aadhaar Card Complete Information Online

The due date of linking PAN with Aadhaar has been extended to 30-06-2021. However, no corresponding amendment has been made yet to Rule 114AAA, which provides that if a person who has been allotted a PAN as on 01-07-2017 and is required to intimate his Aadhaar number failed to intimate the same by 31-03-2020, PAN of such person shall become inoperative immediately after 31-03-2020.

However, when a person whose PAN has become inoperative intimates his Aadhaar after 31-03-2020, his PAN shall become operative from the date of such intimation.