What Happens If PAN Card and Aadhaar Card Not Linked? Importance and Process to Linking Both

For Indian residents, PAN and Aadhaar numbers serve as crucial documents of identification. The Income Tax Department of India issues PAN or the Permanent Account Number, whereas the Aadhaar card is issued by the UIDAI or Unique Identification Authority of India.

The PAN card is mainly used to regulate income tax in India for businesses and individuals and curb tax evasion. The Aadhaar card, on the other hand, is issued to all residents of India as ID and address proof. Linking PAN and Aadhaar has been mandated by India’s IT department.

In this post, we discuss how to link your Aadhaar to your PAN if you have missed the deadline for linking the cards and the consequences of not linking your PAN with your Aadhaar.

What Happens if the PAN and Aadhaar Cards Are Not Linked?

As per the circular issued by the government, the PAN-Aadhaar link last date was 30th June 2023, which has already passed. However, there are still many people in India whose PAN-Aadhaar is not linked yet. The good news is that you can still get your Aadhaar-PAN card linked despite missing the last date. All you need is to pay a penalty of INR 1000 to link PAN with Aadhaar before initiating the linking process.

Not getting your Aadhaar-PAN card linked will make your PAN card inoperative, and it will not fulfill many significant purposes. This will further cause trouble for the cardholder during many official tasks like opening bank accounts, filing income tax returns, and investing in shares and capital instruments. This will also levy penalties on the individual under different IT Act sections, including INR 10,000 under section 139A.

Taxpayers will also have to pay more tax since TDS or tax deducted at source and TCS or tax collected at source will be at a higher rate under sections 206AA and 206CC of the IT Act if the PAN card is not furnished during the procedure.

Who All Are Exempted from the Aadhaar and PAN linking? 

The list of people who come under the Exempted category of PAN-Aadhaar linking is as follows:

1. Residents of the Indian states of Jammu and Kashmir, Assam, and Meghalaya are exempted from the category of PAN-Aadhaar link
2. All taxable non-resident individuals are exempted as per the Income-tax Act, 1961
3. Individuals above the age of 80 years or the Super Senior Citizens are also exempted
4. Individuals who are not citizens of India are also exempted

Why is it Important to Link PAN with Aadhaar? 

Here are some reasons why you must link Aadhaar to PAN card immediately:

• It is important to link your Aadhaar and PAN because not linking the two will make your PAN card inoperative
• Your PAN-Aadhaar linking status is checked at the time of filing for ITR or the Income Tax Return. Non-linking of the two cards might reject the ITR filing
• The linking of PAN and Aadhaar is also needed for several government services. You will need it while applying for a passport, for subsidies, for bank account opening, etc.
• Overall, access to government services becomes problematic if the linking of your PAN-Aadhaar is not done
• You may also find it challenging to get a new PAN card if your old one goes missing or is damaged

What Consequences May Appear if PAN and Aadhaar are Not Linked?

As discussed above, not linking your PAN with Aadhaar makes the PAN card inoperative, which in turn may cause issues like:

• Filing and Claiming ITR becomes impossible for taxpayers with an inoperative PAN
• The taxpayer cannot even process pending returns and pending refunds because of an inoperative PAN
• Higher rates will be applied for TCS/TDS
• TCS/TDS certificates cannot be obtained by the taxpayer as well as the credit of the TCS/TDS will not appear in Form 26AS
• Submitting 15G/15H declarations for zero TDS will be difficult for Taxpayers
• An inoperative PAN card will create issues in:

• • Opening a bank account
  • Applying for a passport
  • In the issue of a debit/credit card
  • For MF or mutual fund purchases
  • You may not be able to deposit more than INR 50,000 cash in a bank or post office in a day
  • Also, you will have hassles in purchasing bank drafts exceeding INR 50,000/day
  • You will be barred from the sale/purchase of goods/services of above INR 2,00,000 per transaction
  • You may face issues in bank transactions exceeding INR 10,000

However, as stated above, you may note that PAN operations can be restored within 30 days by linking the Aadhaar number to PAN after paying a fee of INR 1,000.

What is the Fine Imposed for Not Linking PAN and Aadhaar?

All those residents (taxpayers) of India who are not exempted from the category of PAN-Aadhaar linking and whose PAN-Aadhaar are not yet linked must do so immediately by paying a late penalty of INR 1,000. Individuals are required to pay the penalty payment first before linking their PAN and Aadhaar on the official portal of Income Tax. Make sure that you offer a valid PAN and Aadhaar number along with a valid mobile number while paying the penalty.

How to Activate a PAN Card that has become Inoperative to Link it with Aadhaar?

To activate a PAN Card that has become inoperative, you must pay a fine of INR 1000. Once the fine is paid, you can continue ahead to link your PAN and Aadhaar on the IT e-filing portal as mentioned in the steps below:

1. Go to the official Income Tax e-filing portal:- https://www.incometax.gov.in/iec/foportal/

   

2. Under the ‘Quick Links’ button, click ‘e-Pay Tax’

   

3. Next, under the PAN/TAN, submit the ‘PAN’ number and mobile number and click on the ‘Continue’ button

   

4. You will receive an OTP on your mobile. After the OTP verification, you will be redirected to the ‘Pay Tax’ page. Press ‘Continue’ to proceed
5. Now, click ‘Proceed’ under ‘Income Tax’
6. To pay the fine of INR 1000, click ‘Continue’
7. Next, select the year of assessment, type of payment, and press the ‘Continue’ button
8. Select the pre-filled applicable amount in the ‘Others’ category and press ‘Continue’

The late fee for linking PAN and Aadhaar can be paid by visiting the official Income Tax e-filing Portal. Several online payment gateways can be used for purposes like NEFT/RTGS, net banking, debit card, etc. However, you must have a bank account with an authorized bank such as Axis Bank, ICICI Bank, Bank of Baroda, Canara Bank, Bank of India, Central Bank of India, City Union Bank, Bank of Maharashtra, Federal Bank, HDFC Bank, Indian Bank, Indian Overseas Bank, IDBI Bank, IndusInd Bank, Jammu & Kashmir Bank, Karur Vysya Bank, Kotak Mahindra Bank, RBL Bank, South Indian Bank, Punjab & Sind Bank, Punjab National Bank, UCO Bank, State Bank of India, and Union Bank of India.

Process to Link Aadhaar and PAN

Once you make the late fee payment, you may proceed with the linking of the PAN and Aadhaar by following the steps below:

• Once the fine is paid, go to the ‘Quick Links’ on the home page and select ‘Link Aadhaar’
• Submit the PAN and Aadhaar numbers and click on ‘Validate’
• Submit your mobile number to generate OTP
• Submit the OTP received and press the ‘Validate’ button
• A request to link Aadhaar with PAN will be sent to the UIDAI

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