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What are the Implications of PAN Aadhaar Link Penalty?


What are the Implications of PAN Aadhaar Link Penality?
What are the Implications of PAN Aadhaar Link Penality?

The Indian government wants to make finances clearer and stop people from not paying their taxes, so they have made it mandatory to link Aadhaar (the unique ID card) with PAN (the permanent account number). This detailed guide goes into great depth about what happens if you don't link your Aadhaar and PAN.

 

Table of Contents

 

It explains how an unlinked PAN might stop working, which could mean higher taxes, fines, and problems with financial transactions. The piece also talks about the benefits for both the government and people and shows how to connect Aadhaar to PAN before the government deadline of June 30, 2023. Exemptions for certain groups are also explained, along with the consequences of not following the rules. This gives a complete picture of this important financial requirement.


Understanding  PAN and Aadhar Card?


The Indian government has made it mandatory for everyone to connect their PAN (Permanent Account Number) to their Aadhaar, with certain exceptions for NRIs, non-citizens, those over 80, and people living in particular areas. By giving each taxpayer a distinct identification, this policy seeks to reduce tax evasion. Financial transactions and government services may be impacted by the failure to connect PAN and Aadhaar, among other effects.


The nation's Income Tax Department issues PANs, or Permanent Account Numbers, to individual taxpayers as a special tax identity number. It is a fundamental document for finishing income tax returns as well as different errands like laying out a ledger, making land ventures, purchasing jewelry, applying for a new line of loan, making a Demat account, and so on.


The UIDAI started the Aadhaar card a couple of years prior with the end goal of furnishing every single Indian with a special recognizable identity card or number.  It is considered a more secure personal identity document since it uses biometrics. 


If You Do Not Connect Your Aadhaar and PAN, What Would Happen?

If you don't complete the PAN Card and Aadhar card connection by the deadline, you will have to deal with the following consequences:


PAN Card stops functioning

  • A person's PAN will stop working if they fail to connect it to Aadhaar by the deadline. It won't be feasible to provide, disclose, or quote the PAN number anyplace once it stops working. This might also lead to:

  • Applying a higher tax rate on income taxes

  • Increased TDS gathering 

  • Inability to complete income tax forms, which may result in additional interest charges, fines, and legal ramifications if information about earned income is withheld.

  • Penalties for failing to quote PAN in certain banking transactions


Interchangeability of PAN and AADHAAR is prohibited

  • The Income-tax Act says that Aadhaar and PAN can be used instead of each other if they are linked. This means that you can use either PAN or Aadhaar, based on the situation. But these numbers can't be used in place of each other if they're not linked.

  • Furthermore, no one would be able to cite Aadhaar instead of PAN or vice versa since PAN will become inoperative in the event of non-linking to Aadhaar.


Section 234H Penalties

  • In the event that an individual doesn't connect their PAN and Aadhaar by the deadline, they might be given a punishment of ₹1,000 for failing to connect their PAN and Aadhaar.

  • Non-filing of pay returns would bring about a punishment of ₹ 10,000. 


Formerly, there was a Rs. 500 fee to connect PAN to Aadhaar. As of right now, taxpayers must connect their PAN to Aadhaar by June 30, 2023, or face a ₹ 1,000 late fee. As a result, before registering for the PAN-Aadhaar link on the Income Tax website, they must pay the penalty. To pay the fine, they must, however, make sure they have a working PAN, Aadhaar, and cellphone number.


To pay the fine for connecting your PAN and Aadhaar numbers, do the following actions:


Step 1: Go to the e-filing Portal for Income Tax.


Step 2: Navigate to the “Quick Links” page and click on “e-Pay Tax”.


Step 3: Enter the “PAN” in the “PAN / TAN column” then enter the “MOBILE NO” in the “confirm PAN / TAN” column.


Step 4: The e-Pay Tax page will be shown when the OTP has been verified. Select "Continue" from the menu.


Step 5: Click on “Income Tax” followed by the Proceed”.


Step 6: In “type of payment (Minor head) select “Other receipts (500)”, and for Assessment year, select “2023 – 2024”. then, select “Continue” on the menu.


Step 7: Using the "Others" option, the appropriate amount will be pre-filled. After selecting "Continue," complete the payment.


You can make this late payment through net banking, debits cards, In-person, NEFT/RTGS and payment gateway on the IT e-filing Portal. However, if you have a bank account with one of the following approved banks, you may use the payment gateway option to pay the penalty:


  • Axis Bank

  • Bank of Baroda

  • Bank of India

  • Bank of Maharashtra

  • Canara Bank

  • Central Bank of India

  • City Union Bank

  • Federal Bank

  • HDFC Bank

  • ICICI Bank

  • IDBI Bank

  • Indian Bank

  • Indian Overseas Bank

  • IndusInd Bank

  • Jammu & Kashmir Bank

  • Karur Vysya Bank

  • Kotak Mahindra Bank

  • Punjab & Sind Bank

  • Punjab National Bank

  • RBL Bank

  • South Indian Bank

  • State Bank of India

  • UCO Bank

  • Union Bank of India 


As soon as the payment has been made, connect your PAN and Aadhar card.


Who is in the Exempt Category from linking their PAN to Aadhaar?

This has nothing to do with some particular groups of people.

  • Those age eighty or older.

  • In other words, under the Income-tax act, non-resident

  • An individual who is not an Indian citizen.


What advantages come with connecting PAN and Aadhaar?

What are the government's gains from it?

A lot of "black money" keeps moving around in the economy because audit trails are lost. The link between PAN and Aadhaar makes it easier for the government to keep track of audit logs for transactions. These days, you need an Aadhaar card for almost everything. By tying it to PAN, the IT staff can see a full record of all activities, prevent unnecessary PAN Aadhar Link Penalty and find money leaks quickly.


Compared to PAN cards, Aadhaar cards cover a greater population. Therefore, connecting them would guarantee that more individuals fall inside the tax net and allow the government to deter tax fraud. 


The procedure of Aadhaar-PAN linkage would deter people from having numerous PAN or Aadhaar cards for the purpose of tax avoidance.


What advantages does it provide for taxpayers?

With the Aadhaar-PAN connection, truthful taxpayers nationwide who have been paying their taxes on time while others have escaped tax burden should anticipate equitable treatment when it comes to taxes. This will enable the IT department to decrease tax rates for honest taxpayers while also expanding its tax net.


Since the Aadhaar-PAN linkage would do away with the laborious task of forwarding ITR receipts to the IT department, it will also expedite the filing of IT returns. IT returns will no longer need e-signature authentication thanks to Aadhaar e-verification.


Following the Aadhaar and PAN connection, taxpayers will also have access to an overview of all their IT transactions by logging in to the IT website using their login credentials.


How is Aadhaar connected to PAN?

Using the E-filing Portal

Without using the Income Tax E-filing site to log in

The first step is to choose the "Link Aadhar" option located under the "Our Services" heading on the e-filing webpage.


After that, he or she must input all of the necessary information without fail. After selecting the checkboxes next to the relevant terms and conditions, press the "Link Aadhar'' button.


The registered cellphone number will get an instant 6-digit OTP that must be input for verification. 


Either manually input the information and click the "Validate" button, or the form will be read automatically.


It's crucial to be aware that the OTP may only be entered three times and has a 15-minute validity window. When the OTP expires, it will be shown by the countdown timer on the screen. 


Should the OTP fail to transmit, try again by selecting the "Resend OTP" option.


Once the OTP has been entered and submitted successfully, the linking is finished.


After Entering the E-filing Site

After entering your password and user ID, click "Continue." 


Then, there will be an option labeled "Link Aadhar to PAN" on the e-filing dashboard, along with a matching "link" option. Press the same button.


Instead, the “My Profile” menu on the top-right corner of the screen which has the drop-down includes the “Aadhaar.”


Subsequently, please submit all requisite details such as name, date of birth, gender and Aadhar Number. Click on Link AADHAAR once you have ticked against the appropriate terms and conditions. This concludes the connection process.


Through the SMS Service

Link your Aadhaar and PAN through SMS
Link your Aadhaar and PAN through SMS

Manually link Aadhaar and PAN by completing Form (Annexure 1)

People may now connect their PAN and Aadhaar via the manual way, according to CBDT. If there is a discrepancy between the PAN and Aadhaar data and it is impossible to connect the two via an online or SMS approach, this technique may be employed.


You must physically connect your Aadhaar and PAN by visiting a PAN, NSDL, or UTIITSL service center and filling out Annexure-1 with copies of your Aadhaar and PAN. In the event that Aadhaar or PAN needs to be corrected, you will have to pay the appropriate charge. The fees for Aadhaar and PAN corrections are Rs 25 and Rs 110, respectively.



How can you tell whether your PAN and Aadhaar are connected?

By visiting the "Link Aadhar status" page under the "Our Services" heading, one may examine the Link Aadhar Status Pre-login. After providing the PAN and Aadhar number, the see link status button has to be clicked.


Finding the "Link Aadhar to PAN" and choosing the "Link Aadhar Status" option that is next to it would allow one to examine Link Aadhar Status after logging in. After that, the Link Aadhar status will be shown.


What is the Current government deadline for linking Aadhaar PANs?

The Government of India has announced that the deadline for connecting Aadhaar and PAN is June 30, 2023.


Conclusion

As a final note, the compulsory linking between Aadhaar and PAN is an essential aspect of the Indian government’s plan to simplify all financial dealing, eliminate tax evasion, and strengthen tracing trail records. Connecting these identifiers by the deadline, June 30, 2023, is fundamental and could result in failure. For instance, lack of connection leads to PAN Aadhar Link Penaltydysfunctionality, high taxes, and monetary rebatespenalties. Nevertheless, exceptions have been made to a few categories involving individuals above 80 years of age, non-residents, and non-citizens. This connection gives back to the government by eliminating tax evasion, extending the tax net while offering honest taxpayers equitable treatment, and simplifying procedures.


A financial identity is required in order to stay informed, dodge penalties, and benefit from being connected. Ensure you are responsible for your tax duties, as TaxBuddy helps you navigate through the winding taxation pathways and implications of PAN Aadhaar Link Penalty.


FAQs

1. If I miss the deadline, can I still connect my PAN to my Aadhaar?

It is still possible to connect your PAN and Aadhaar even if the June 30, 2023 deadline passes. However, if you miss the deadline, your PAN card will stop working. It must be connected to the Aadhaar number before it can be turned on. If PAN-Aadhaar is linked after the deadline, there is a ₹1,000 fine.


2. How long is the validity of a PAN card?

The PAN (Permanent Account Number) card given by India's Income Tax Department is valid for life. Unlike other forms of identification, such as Aadhar cards, changes in the cardholder's address do not impact the validity of the PAN card. As a result, once received, the PAN card serves as a permanent and lasting identifying document for the duration of an individual's life.


3. Who is not required to connect their PAN with Aadhaar?

The linking of PAN with Aadhaar is not required for non-residents, those over 80 years old, or inhabitants of the states of Assam, Jammu & Kashmir, or Meghalaya.


4. Is there paperwork needed to connect Aadhaar and PAN?

There are no paperwork requirements for linking PAN with Aadhaar. Entering the PAN and Aadhaar numbers on the IT website by clicking on the appropriate link is a pretty easy procedure.


5. Even if my name appears differently on Aadhaar and PAN, can I still connect them?

Before connecting the two papers, you must start the name change procedure for either one if your name appears differently on your PAN card or Aadhaar card.


6. Do Super elderly citizens need to get an Aadhaar card?

Nope. Super elderly persons are not required to connect their PAN to Aadhaar; they must be at least 80 years old. Therefore, even if they haven't connected their PAN card to an Aadhar card, it will stop working on July 1, 2023.


7. Is Aadhaar PAN linkage free of charge?

You must bring your PAN, Aadhaar, and a fee paid (of Rs.1000/) challan copy to the center and use the service after paying the required biometric authentication fee. Protean/UTIITSL websites may be consulted for information on authorized Service Providers for biometric authentication.


8.  What should I do if my PAN stops working?

These implications of an inoperative PAN will take effect on July 1, 2023, and will last until the PAN becomes operational. A cost of one thousand rupees would continue to be charged to activate the PAN by informing the Aadhaar number.

For further details, please see Circular No. 03 of 2023, issued March 28, 2023.


9. How long does connecting a PAN to an Aadhaar take?

The time it takes to connect a PAN and an Aadhaar card depends on a number of variables, including the volume of applications, the quality of the information, and the effectiveness of the verification process. While it usually takes 5 to 10 working days, it is crucial to remember that specific circumstances may vary.


10. How many PAN cards are associated with Aadhar?

In India, there are 70.24 crore PAN card holders, with 57.25 crore having their PAN cards linked to Aadhaar. According to the RTI response, over 12 crore PAN cards have not been connected with Aadhaar, with 11.5 crore cards deleted.



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