Even though your PAN has not become inoperative yet if not linked with the Aadhaar number as the deadline for it has increased, it will attract a penalty now for not doing it so far and will become inoperative if not done until the new deadline of March 31, 2023. If permanent account number (PAN) becomes inoperative, you will stop getting some key government services.
The matter of PAN-Aadhaar interlinking started after instances had come to the notice of the income tax department that multiple permanent account numbers (PANs) have been allotted to one person or one PAN has been allotted to more than one person.
Last week, The finance ministry said, “Till March 31, 2023, the PAN of the assessees who have not intimated their Aadhaar, will continue to be functional for the procedures under the Act, like furnishing of return of income, processing of refunds, etc."
Services To Be Affected If PAN Not Linked with Aadhaar Until March 2023
In a statement on March 30, the finance ministry said, “After March 31, 2023, the PAN of taxpayers who fail to intimate their Aadhaar, as required, shall become inoperative and all the consequences under the Act (Income Tax Act, 1961) for not furnishing, intimating or quoting the PAN shall apply to such taxpayers."
As part of this, the CBDT issued a circular saying “Rule 114AAA of the Income Tax Rules provides that if PAN of a person has become inoperative, he will not be able to furnish, intimate or quote his PAN and shall be liable to all the consequences under the Act for such failure". It enlisted the services that will be affected if a person fails to link PAN with Aadhaar:
1) The person shall not be able to file return using the inoperative PAN
2) Pending returns will not be processed
3) Pending refunds cannot be issued to inoperative PANs
4) Pending proceedings as in the case of defective returns cannot be completed once the PAN is inoperative
5) Tax will be required to be deducted at a higher rate as PAN becomes inoperative
Penalty for Not Doing Linking PAN-Aadhaar So Far
The Central Board of Direct Taxes (CBDT) in a notification last week said that those who have not linked their Aadhaar and PAN numbers so far will have to pay a penalty of Rs 500 if done within three months and Rs 1,000 if done beyond that. However, the PAN will remain operative for the time being even if not being linked to Aadhaar.
The notification released on March 30 said, “Every person who, in accordance with the provisions of sub-section (2) of section 139AA, is required to intimate his Aadhaar number to the prescribed authority in the prescribed form and manner, fails to do so by the date referred to in the said sub-section, shall, at the time of subsequent intimation of his Aadhaar number to the prescribed authority, be liable to pay, by way of fee, an amount equal to, — (a) five hundred rupees, in a case where such intimation is made within three months from the date referred to in sub-section (2) of section 139AA; and (b) one thousand rupees, in all other cases."
