The linking of the Aadhaar card with the Permanent Account Number (PAN) card shas been a mandatory process and significant move in India's financial landscape. This process aims to streamline and enhance transparency in financial transactions, prevent tax evasion, and promote efficient governance. In this blog, we will delve into the importance of linking Aadhaar card with PAN card, the process involved, and the implications of not doing so.
What is PAN and Aadhaar?
The Permanent Account Number (PAN) is a 10-digit alphanumeric identifier issued by the Income Tax Department of India. It plays a vital role in monitoring financial transactions that attract tax liability from a single source, making it convenient for the government to maintain accurate tax records. Notably, having a PAN card is mandatory for filing income tax returns. Moreover, PAN serves as an authentic identity proof for various purposes.
What is Aadhaar Card?
The Aadhaar card is a 12-digit unique identification number issued by the Unique Identification Authority of India to every Indian citizen. It serves the dual purpose of identity and address proof. In recent times, the Indian government has made it compulsory for all citizens to possess a single identification document. This requirement includes linking your Aadhaar card with PAN, irrespective of whether you file an income tax return or not.
Why linking PAN with Aadhaar is Important?
Linking your Aadhaar with PAN card is essential for several reasons:
-
Prevent tax evasion: It enables the government to monitor financial transactions effectively, reducing the scope for tax evasion.
-
Simplified income tax filing: It streamlines the process of filing income tax returns, making it more convenient for taxpayers.
-
Effective identity verification: Linking Aadhaar with PAN ensures the accuracy of personal details, reducing the risk of identity fraud.
-
Eligibility for government subsidies:Many government welfare schemes require Aadhaar-PAN linkage for beneficiaries to receive their entitlements.
How to link Aadhaar with PAN card
There are multiple methods to link Aadhaar card with PAN card, such as through SMS, online portals, and during the PAN application process. The official Income Tax e-filing website provides a user-friendly platform for creating an Aadhaar-PAN link. The online linking facility is accessible to all citizens of the country, ensuring a hassle-free process. This mandate for linking Aadhaar with PAN aims to enhance transparency and streamline financial transactions, making it a crucial step in India's financial compliance framework.
PAN Aadhaar Linking Online Process
Follow these steps to link PAN with Aadhaar:
-
Visit the official website www.incometaxindiaefiling.gov.in and click on the link to link Aadhaar.
-
Provide PAN number, Aadhaar number, enter the actual name as per Aadhaar card and enter the captcha code. Then click on ‘link Aadhaar’.
-
Make sure the name, gender and date of birth in Aadhaar in PAN is exactly the same.
Follow these steps to link PAN card and Aadhaar card after logging to the income tax website:
-
Register yourself on the portal of income tax e-filing.
-
Go to the profile setting and click on ‘link Aadhaar’.
-
Enter your login ID, password and date of birth to log in to the official portal of Income Tax Department.
-
Click on the option ‘Aadhaar link to PAN’ in the pop up window.
-
Cross check the details that will automatically appear on the e-filing portal.
-
Enter your Aadhaar card number and captcha code and click on ‘link Aadhaar’ button. A message will pop up confirming the successful linking process.
Apart from the online process, you can link Aadhaar card with PAN card using the simple SMS process:
Send SMS to 567678 or 56161 in the format: UIDPAN <12 DIGIT AADHAAR NUMBER> <10 DIGIT PAN>
Missed due date for Aadhaar-PAN linking? Here’s what you need to know!
The deadline for linking your Aadhaar and PAN card was June 30, 2023, and the government has not granted an extension to this deadline. Failure to link your PAN and Aadhaar by this date will render your PAN inoperative.
Starting from July 1, 2023, if your PAN is not linked with Aadhaar, it will be considered inoperative. However, there is an option to reactivate your PAN by submitting the Aadhaar-PAN linking request after June 30, 2023. This reactivation process will require you to pay a penalty.
It's crucial to stay updated with any changes or announcements from the government regarding the Aadhaar-PAN linking process to ensure compliance with tax regulations and avoid any disruptions in your financial transactions.
Who is exempted from linking Aadhaar with PAN?
Referece:
https://www.hindustantimes.com/business/panaadhaar-link-know-people-exempted-from-this-process-101677842694224.html
There are specific categories of individuals who are not mandated to link their Aadhaar with their PAN card. These exemptions include:
-
Residents of Assam, Jammu and Kashmir, and Meghalaya.
-
Non-residents as defined by the Income Tax Act, 1961.
-
Individuals aged 80 years or above at any point during the previous year.
-
Non-citizens of India.
It's important to note that individuals falling within any of these exempt categories can voluntarily choose to link their Aadhaar with their PAN without incurring any fees. Furthermore, it's essential to stay updated on any potential modifications to these exemptions, as they are subject to change in the future.
Disadvantages of not linking Aadhaar with PAN
If you fail to link your Aadhaar with PAN, the consequences can be significant. The most notable impact is on the Tax Deducted at Source (TDS) rate. Suppose your PAN is not linked to Aadhaar by the specified deadline. In that case, the TDS rate on various financial transactions may increase to 20%, which is substantially higher than the usual rates.
Illustration: Let's say you have a Fixed Deposit (FD) with a bank that provides an interest rate of 6% annually. Without Aadhaar-PAN linkage, the TDS rate on the interest earned would be 20%. So, if your FD earns Rs. 10,000 in interest, Rs. 2,000 would be deducted as TDS, leaving you with only Rs. 8,000.
PAN Card Status: Operative and Inoperative
PAN cards can have two statuses: operative and inoperative. An operative PAN card is one that is linked with your Aadhaar number, while an inoperative PAN card is not linked.
Consequences of an Inoperative PAN Card
If your PAN card becomes inoperative due to the lack of Aadhaar linkage, you may face difficulties in conducting various financial transactions. Additionally, you could be penalized with a higher TDS rate, as mentioned earlier.
How to Make a PAN Card Operative
After June 30, 2023, PAN which is not linked with Aadhaar, will be considered inoperative. However, there is an option to reactivate your PAN card by submitting the Aadhaar-PAN linking request which comes with a penalty.
If your PAN has become inactive, you can reactivate it by paying a fine. To initiate the Aadhaar-PAN linking request, follow these steps:
-
Go to incometax.gov.in/iec/foportal/ and navigate to 'e-Pay Tax' to start the Aadhaar-PAN linking process.
-
Enter your PAN details and proceed to CHALLAN NO./ITNS 280 for submitting the Aadhaar-PAN linking request.
-
Ensure that the fee payment is made under Minor head 500 (Fee) and Major head 0021 [Income Tax (Other than Companies)] in a single challan.
-
Choose the mode of payment.
-
Enter your PAN, select the Assessment year, and provide your address details.
-
Enter the Captcha code and click on the Proceed tab to complete the process.
Conclusion
Linking your Aadhaar card with your PAN card is not just a regulatory requirement; it's a crucial step toward a more transparent and efficient financial system. Failing to link the two may lead to higher TDS rates and complications in your financial transactions. So, it's essential to complete this process in a timely manner to enjoy the benefits and avoid unnecessary hassles. Those who failed to complete the process must know the implications and submit a linking request to further make their PAN card operative.
MI Lifestyle is dedicated to incorporating best practices and complying with all regulatory standards, maintaining the utmost levels of ethics and transparency. It is crucial to highlight that the compulsory link Aadhaar with PAN is a requirement for all citizens of India. And hence, it is necessary for every Indian citizen, including MI Lifestyle distributors to be vigilant towards the government updates and announcements.
Frequently Asked Questions
1. How can I link my Aadhaar to PAN card?
Go to e-filing Portal > Login > On Dashboard, in Profile section under the Link Aadhaar to PAN option, click Link Aadhaar.
2. How can I check my Aadhaar PAN link status?
Without Logging In: Go to the Income Tax e-filing website, look for 'Quick Links', and click on 'Link Aadhaar Status'. Put in your PAN and Aadhaar numbers to check the status. With Logging In: Log in to the e-filing website, go to the 'Dashboard' or 'My Profile', and choose 'Link Aadhaar Status'.
3. Is PAN Aadhaar link free?
No. If you connect your PAN with Aadhaar between July 1, 2022, and June 30, 2023, you'll need to pay a penalty of Rs.1,000 before requesting the linking.
4. How can I check my Aadhaar bank linking status?
To quickly check if your Aadhaar is linked to your bank, use your mobile phone. Follow these steps:
Dial 9999*1# from the mobile number linked to your Aadhaar.
Enter your 12-digit Aadhaar number accurately after the call connects.
5. How to link PAN with Aadhaar after 30 june 2023?
The notification stated, "To reactivate the PAN card, individuals need to inform the designated authority about their Aadhaar linkage and pay a fee of Rs. 1,000. The reactivation process will take 30 days from the date of linking."