The Income Tax Department, in a recent notification, has mandated that taxpayers link their Permanent Account Number (PAN) with their Aadhaar by May 31, 2024, after this date your PAN will become Inoperative and will be of no use as you cannot use if for any financial transaction, KYC, leads to higher tax deductions, cannot File ITR and Refund is not allowed
Why Link PAN with Aadhaar?
According to the regulations, if a taxpayer’s PAN is not linked with his or her Aadhaar, Tax Deducted at Source (TDS) must be deducted at higher rate of 20% . This higher rate can significantly impact your finances, making the linking process essential.
Consequences of Non-Linking
If PAN is not linked with Aadhaar by the deadline, the PAN card becomes inoperative. This has several implications:
- No Refunds:No refunds will be processed against such PANs.
- Higher TDS and TCS:TDS (Tax Deduction at Source) and TCS (Tax Collection at Source) will be deducted/collected at a higher rate.
- Income Tax Return filing not Allowed
- Refund of Income tax not allowed
- Financial Transaction Difficulties:The PAN card will stop working, leading to difficulties in financial transactions, including bank transactions, investments, and other financial activities.
Additional Impact on Property Transactions
If you are buying property (land, building, house, etc.) valued at more than ₹50 lakh, it is mandatory to deduct TDS at 1%. However, if the seller’s PAN is inoperative, you must be extra careful and deduct TDS at 20%. Before depositing TDS, always check the PAN-Aadhaar link status of the seller to avoid receiving a TDS demand notice for non-compliance with this provision.
How to Check PAN-Aadhaar Link Status
You can easily check the status of your PAN-Aadhaar link by following these steps:
- Visit the Income Tax Portal:
- Go to the official website: incometax.gov.in.
- Navigate to ‘Quick Links’:
- Select ‘Link Aadhaar Status’.
- Enter Details:
- Enter your PAN and Aadhaar details along with an active mobile number to receive an OTP.
- Enter OTP and Check Status:
- Enter the OTP received on your mobile and check the status.
Steps to Link PAN with Aadhaar
If you missed the deadline, you can still link your PAN with Aadhaar online by following these steps:
- Pay the Penalty:
- Pay the penalty through the e-Pay Tax functionality on the Income Tax e-Filing website.
- Submit the Linking Request:
- Submit the Aadhaar linking request on the e-Filing portal.
PAN-Aadhaar Link Fees/Charges
If you link your PAN with Aadhaar after the deadline, you will be required to pay a penalty of ₹1,000. This fee must be paid when you raise a request for linking via the Income Tax website.
Exempt Categories
Certain categories are exempt from the PAN-Aadhaar linking requirement. These include:
- Residents of Specific States:
- Individuals residing in the states of Jammu and Kashmir, Assam, and Meghalaya.
- Non-Resident Taxable Persons:
- Non-resident taxable persons as per the Income-tax Act, 1961.
- Super Senior Citizens:
- People aged more than 80 years.
- Non-Citizens:
- Persons who are not citizens of India.
Conclusion
Linking your PAN with Aadhaar is not just a regulatory requirement but also a step towards ensuring seamless financial transactions and avoiding penalties. If you haven’t linked your PAN with Aadhaar yet, make sure to do so before the deadline to avoid higher tax deductions and other financial complications. Always check your PAN-Aadhaar link status and follow the proper procedures to maintain your financial health. Moreover, if you are involved in high-value property transactions, ensure the seller’s PAN is linked with Aadhaar to avoid hefty penalties and compliance issues.
