Why To Link PAN With Aadhaar
The Income Tax Department has issued a fresh notification, asking the regular taxpayers to link their Permanent Account Number (PAN) with Aadhaar by May 31, 2024. Taking to Twitter, the IT department said that those who fail to meet the deadline will face a higher rate of tax deduction at source (TDS).
What is PAN-Aadhaar Linking?
For general information, the PAN (Permanent Account Number) is a ten-digit alphanumeric number issued by the Income Tax Department to taxpayers in India. And the Aadhaar is a unique twelve-digit identification number issued to Indian residents by the Unique Identification Authority of India (UIDAI). The linking of the PAN with Aadhaar card helps in streamline tax filing, eliminate duplicate PAN cards, and improve transparency in financial transactions.
Who Needs to Link Aadhaar and PAN?
According to Section 139AA of the Income Tax Act, every individual who has been allotted a PAN as of July 1, 2017, and is eligible for an Aadhaar number, must link the two. Failure to do so by the specified deadline will result in the PAN becoming inoperative. However, individuals in exempted categories will not be affected.
Why One Should Link PAN With Aadhaar?
All must link PAN with Aadhaar Card because the Income Tax Department made PAN-Aadhaar linking mandatory for taxpayers and said the one who fail to link their PAN with Aadhaar by the deadline will face a penalty. Apart from this, their PAN card will become inoperative, which can cause significant inconvenience.
For whom is Aadhaar-PAN linkage not compulsory?
Aadhaar-PAN linkage requirement does not apply to any individual who is:
- Residing in the States of Assam, Jammu and Kashmir, and Meghalaya;
- a non-resident as per the Income-tax Act, 1961;
- of the age of eighty years or more at any time during the previous year; or not a citizen of India.
Note: The exemptions provided are subject to modifications depending on subsequent government notifications on this subject
For further details refer to Department of Revenue Notification No 37/2017 dated 11th May 2017”. However, for users falling in any of the above category, voluntarily desires to link Aadhaar with PAN fee payment of specified amount is required to be done.
Consequences of Not Linking PAN with Aadhaar
Failing to link PAN with Aadhaar by the deadline can have significant impacts:
Higher TDS: Non-compliance will result in a higher rate of tax deduction at source.
ITR Filings: It will complicate income tax return (ITR) filings. The last date to file ITR is July 31, 2024.
Inoperative PAN: PAN will become inoperative, affecting all financial transactions requiring PAN.