The government has made it compulsory to link Permanent Account Number (PAN) with Aadhaar by December 31, 2024. In case of failure to comply, it would lead to deactivation of PAN.
An active PAN is a necessary requirement for filing taxes, receiving refunds, and to complete any financial transaction. Since July 1, 2023, Rs 1,000 is charged to link an inactive PAN.
Why PAN-Aadhaar Linking Is Important?
Here are the reasons why it is important to link PAN with Aadhaar.
For Compulsory Tax Compliance: The linking will ensure that you can file your income tax returns and claim refunds.
Step Towards Prevention Of Financial Fraud: It will prevent multiple PANs, thus making it transparent.
Avoid Paying Higher TDS/TCS: Inactive PAN will also attract higher tax deducted at source (TDS) and tax collected at source (TCS) rates, thus increasing liability.
Simplification Of Transaction Business: Linking your PAN with Aadhaar will integrate them with your banks and government platforms, thus streamlining your transactions.
PAN-Aadhaar Linkage, Comply Before December 31, 2024
Know why it is important to link your PAN with Aadhaar and how to do it. Non-linkage could lead to deactivation of PAN, levy of penalties and denial of access to financial services
Penalty For Non-Linkage
Between July 2023 and January 2024, the government received Rs 601.97 crores in penalties, which suggests a large scale of non-linkage of PAN and Aadhaar. Non-linkage can further attract the maximum tax rates and lead to other banking hurdles.
Step-By-Step Guide To Link PAN with Aadhaar
Here are the steps to link your PAN with Aadhaar.
▪ Access the e-Filing Portal and navigate to the “e-Pay Tax” tab
▪ Choose “Other Receipts (500)” and pay Rs 1,000 with the respective payment mode
▪ Go to the “Link Aadhaar” option from the “Quick Links” section in the portal
▪ Fill in PAN and Aadhaar details and do OTP verification
▪ Then re-enter the portal and complete the linking process after successful payment
How To Check The Linkage Status
▪ Click on the e-Filing portal” and select “Link Aadhaar Status”
▪ Enter PAN and Aadhaar
▪ See an acceptance message on your linking status
Common Errors
Make sure that the name provided in the PAN and Aadhaar are the same. Rectify discrepancies, if any, through respective portals. Try getting through to the portal during non-peak hours or else contact the Income Tax Department.
The following are not required to link PAN with Aadhaar:
▪ Non-residents under the Income-tax Act, 1961
▪ Senior citizens who are 80 years and above at any time during the previous year
▪ Citizens residing in the following states – Assam, Jammu & Kashmir, and Meghalaya
As of January 2024, a total of 114.8 million PANs are yet to be linked with Aadhaar. More than 510 million PANs were successfully linked which shows a remarkable progress. For inactive PANs, this will significantly impact financial planning, including restricted financial access, delayed refunds, and increased tax deduction rates. The deadline for linking PAN-Aadhaar is December 31, 2024. So, if the person fails to do so, then it will be a case of non-compliance, which in turn may lead to a halt in financial services.