PAN (Permanent Account Number) is a unique 10-digit alphanumeric identifier issued by the Income Tax Department. Aadhaar is a 12-digit unique identification number issued by the Unique Identification Authority of India (UIDAI). Linking PAN with Aadhaar is mandatory for taxpayers in India for several reasons.
Note that the last date for linking PAN with Aadhaar has been extended to June 30, 2023. It is important to link your PAN with Aadhaar to avoid any penalties or consequences.
What Will Happen If PAN Becomes Inoperative?
If PAN becomes inoperative, the income tax department will consider that the individual has not submitted PAN and therefore liable to face the consequences for the same.
“Where a person, whose permanent account number has become inoperative…, is required to furnish, intimate or quote his permanent account number under the Act, it shall be deemed that he has not furnished, intimated or quoted the permanent account number, as the case may be, in accordance with the provisions of the Act, and he shall be liable for all the consequences under the Act for not furnishing, intimating or quoting the permanent account number,” the CBDT mentioned earlier.
According to Section 272B of Income Tax Act, a penalty of Rs 10,000 can be levied in case PAN is not quoted or furnished as required by the Law. Under the provisions, a penalty could be imposed for every such non-compliance.
Aadhaar-PAN Link – Fee & Penalty
As of now, individuals will have to pay a fine of Rs 1000 for linking PAN-Aadhaar. Till June 30, 2022, this penalty was Rs 500 which was doubled from July 1, 2022 onwards.
A person who has failed to intimate the Aadhaar number shall face the following consequences as a result of his PAN becoming inoperative:
- Refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made to him;
- Interest shall not be payable to him on such refund for the period, beginning with the date specified under sub-rule (4) of rule 114AAA and ending with the date on which it becomes operative;
- Where tax is deductible under Chapter XVJJ-B in case of such person, such tax shall be deducted at higher rate, in accordance with the provisions of section 206AA;
- Where tax is collectible at source under Chapter XVJJ-BB in case of such person, such tax shall be collected at a higher rate, in accordance with the provisions of section 206CC.
These consequences will take effect from July 01, 2023 and continue till the PAN becomes operative. The PAN can be made operative again in 30 days, upon intimation of Aadhaar to the prescribed authority after payment of fee of Rs.1,000.
The consequences of PAN becoming inoperative will not be applicable to those persons who have been provided exemption from intimating Aadhaar number under the provisions of sub-section (3) of section 139AA of the Act. Read more
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