PAN-Aadhaar linking: What happens if both are not linked by March 31?

If you are yet to link your Permanent Account Number (PAN) with Aadhaar number, the deadline to do the same is March 31, 2020.

The Income Tax (I-T) Department has been tweeting regular reminders regarding the same from its official Twitter handle. On March 16, the tax department tweeted saying that it was "mandatory" to link PAN with Aadhaar and advised people not to "miss" the stipulated deadline of March 31.




Here is a look at what will happen if you do not link your PAN with Aadhaar before March 31.

• What will happen if PAN is not linked with Aadhaar?

If PAN and Aadhaar are not linked before March 31, then your PAN will become inoperative. Earlier the rules did not clearly define the term 'inoperative'. However, the Central Board of Direct Taxes (CBDT) in a notification dated February 13, 2020 clarified the meaning of PAN becoming 'inoperative' and how to make it operative once again.

According to CBDT, if PAN becomes inoperative with effect from April 1, 2020, you will not be able to use your PAN to conduct financial transactions wherever quoting of PAN is mandatory. Some of these financial transactions include opening of a bank account, investing in a fixed deposit, filing of income tax returns etc.

Further, once the PAN becomes inoperative, it will be deemed that a person does not have a PAN. However, in case PAN becomes inoperative, then it will not affect the financial transactions undertaken by an individual retrospectively. This is because Budget 2019 presented in July, amended the law on the same. Prior to the new law, if PAN is not linked with Aadhaar, then it would be deemed as PAN would become invalid and this would have impacted the financial transactions undertaken by an individual retrospectively. To protect the validity of such transactions, the law was amended.

• Will my PAN become operative if I link it after April 1, 2020?

According to the CBDT notification dated February 13, 2020, PAN will become operative again from the date on which PAN is linked with Aadhaar. For instance, if your PAN becomes inoperative and you link it with Aadhaar on April 15, 2020, then your PAN will become operative once again with effect from April 15, 2020.

An individual can also check if their PAN is linked with Aadhaar on the e-filing website of the income tax department. However, to avoid the inconvenience, it is advisable to link the same before the deadline.

Dr. Suresh Surana, Founder, RSM India says, "If the aadhar is not linked with PAN, then the PAN would become inoperative. Quoting inoperative PAN shall be treated as non-furnishing of PAN for specified transactions, where PAN is required to be quoted (Purchase of Property / Purchase of Mutual funds / furnishing of tax return, etc). There is also a penalty of Rs. 10,000 prescribed under section 272B which could be levied by the income tax authorities. The window for linking aadhar with PAN is also available after the deadline of 31st March 2020, wherein the PAN shall become operative from the date of intimation of the Aadhar by taxpayer."

• What if I quote my inoperative PAN?

According to chartered accountants, if an individual's PAN becomes inoperative and such an individual is required to quote, furnish or intimate the PAN wherever required, then it shall be deemed as he/she has not furnished the same. Further, he/she will be liable for consequences under the Income-tax Act, 1961. The consequences may include levying of penalty of Rs 10,000 under Section 272B of the Act.

• Process of linking PAN with Aadhaar

An individual can link PAN with Aadhaar either via SMS or by visiting the tax department's e-filing website. Remember, while linking both, your personal details should match.

• Individuals exempted from linking PAN with Aadhaar

Dr. Surana says, "Certain categories of assessees are exempted from linking PAN with Aadhar, who have not obtained aadhar and fulfill any of the below conditions:
a) Individuals residing in the States of Assam, Jammu and Kashmir and Meghalaya
b) Individuals who are non-resident as per the Income-tax Act, 1961
c) Individuals who are of the age of eighty years or more at any time during the previous year
d) Individuals who are not a citizen of India"