Linking PAN with Aadhaar – 2023 Deadline and Consequences

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By June 30, 2023, all taxpayers are required to link their Permanent Account Number (PAN) with their Aadhaar number, as directed by the Central Board of Direct Taxes (CBDT).. This linkage is mandatory, and failure to comply will result in the PAN becoming inoperative from July 1, 2023. The purpose of this linking is to address instances of duplicate PAN allotments and ensure a robust de-duplication process in the PAN database.

The Reason for Linking PAN with Aadhaar

The income-tax department introduced the linking of Permanent Account Number with Aadhaar to tackle cases of multiple Permanent Account Number allotments to a single individual or the allocation of one Permanent Account Number to multiple persons. By making Aadhaar linkage mandatory for eligible taxpayers, the department aims to enhance the accuracy and integrity of the PAN database.

Who Needs to Link PAN with Aadhaar?

As per a circular issued by CBDT in March 2022, every person with a Permanent Account Number allotted on or before July 1, 2017, must link their Aadhaar number with Permanent Account Number before June 30, 2023. In case if someone fail to link one’s Permanent Account Number will be in-operative. However, there are exceptions to this requirement, which include individuals aged eighty years and above, non-residents as per the Income-tax Act, and non-citizens of India.

What if PAN is not Linked with Aadhaar by June 30

Failing to link Permanent Account Number with Aadhaar by the specified deadline will lead to severe consequences under the Income-tax Act. Some of them are below:

1. Inability to file income tax returns using the inoperative Permanent Account Number.
2. Non-processing of pending returns.
3. Unavailability of pending refunds for inoperative Permanent Account Number.
4. Inability to complete pending proceedings, such as in the case of defective returns.
5. Requirement to deduct tax at a higher rate when the Permanent Account Number becomes inoperative.

Additionally, individuals may face difficulties in conducting financial transactions, as Permanent Account Number is a vital KYC criterion for banks and other financial institutions.

SEBI’s Directive on Linking PAN with Aadhaar for Investors

The Securities and Exchange Board of India (SEBI) has also mandated existing investors in the securities market to link their PAN with their Aadhaar number. This move ensures valid KYC compliance for all participants in the market. Failure to comply with the CBDT circular dated March 30, 2022, may result in non-KYC compliant accounts, leading to restrictions on securities and other transactions until PAN and Aadhaar linkage is completed.

How to Link PAN with Aadhaar

Linking Permanent Account Number with Aadhaar can be done easily by following these steps:

1. Visit the official website of the Income Tax Department: http://www.incometax.gov.in
2. Click on the “Link Aadhaar” option.
3. Provide the necessary details, including Permanent Account Number and Aadhaar numbers.
4. Verify the information before you click on Submit.

Conclusion

Linking Permanent Account Number with Aadhaar is a mandatory requirement set by the CBDT to ensure accurate identification and prevent duplicate Permanent Account Number allotments. Taxpayers and investors in the securities market must adhere to the June 30, 2023 deadline to avoid severe consequences and disruptions in their financial transactions. By completing this simple linkage process, individuals can continue their tax compliance smoothly and enjoy uninterrupted access to various financial services.

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