PAN-Aadhaar Linking Extension: Missing the 31st March 2023 Deadline and Its Consequences

As the deadline for linking Permanent Account Number (PAN) with Aadhaar approaches, it is crucial to understand the impact of missing this critical deadline. For taxpayers who have not yet linked their PAN with Aadhaar, this guide provides a comprehensive overview of the penalties and consequences.

The Importance of PAN-Aadhaar Linking

For individuals eligible to pay or assess tax through PAN, the linking of PAN with Aadhaar is mandatory. At this stage, it is essential to understand the immediate and long-term ramifications of not complying with this requirement.

Disadvantages of Not Linking PAN with Aadhaar

You will no longer be able to file your Income Tax Return (ITR) as your PAN will become deactivated. Any pending tax returns (ITR) or refund claims cannot be processed if your PAN is deactivated. PAN deactivation will affect banking transactions, particularly those exceeding a certain limit, which require PAN. Government scheme benefits may be revoked if your PAN is deactivated. Deduction or credit for Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) will not be available if you do not have an active PAN. You may not be able to open a bank account or obtain debit or credit cards. Any transaction involving the sale or purchase of goods or services exceeding Rs. 200,000 per transaction will be prohibited.

Consequences from 1st July 2023

Starting from 1st July 2023, the PAN of taxpayers who have not linked their Aadhaar as required will become inoperative. This inoperative status will have the following consequences:

No refunds will be made for such PAN cards. No interest will be payable on refunds during the inoperative period. TDS and TCS will be deducted or collected at the higher rate as provided in the Act.

After the inoperative period, the PAN can be made operative again by intimation of Aadhaar to the prescribed authority within 30 days, subject to the payment of a fee of Rs. 1,000.

Government's Previous Actions and Future Plans

Given the significant number of PAN cards still unlinked, it is likely that the government may extend the deadline again. In the past, court cases have pressured the government to provide clarity on what happens to deactivated PAN cards. As of now, the government cannot even compile a list of unlinked PAN cards, let alone conduct investigations.

Final Caution

Only 10 days remain to comply with the requirement. It is strongly advised to act immediately to avoid future complications and potential penalties. The deadline now is 31st March 2023, with a penalty of Rs. 1,000. If you have neglected the deadline, attempt to rectify the situation and seek professional guidance.