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New Delhi: The Central Board of Direct Taxes (CBDT) has extended the deadline for linking PAN card with Aadhaar from March 31, 2022 to March 31, 2023, bringing significant relief to individuals. However, on April 1, 2022, the person who links both the documents will be fined.

The CBDT announced this in a notification dated March 29, 2022. In order to complement the PAN-Aadhaar linking system for detection of false PANs, the Finance Act of 2021 inserted a new section 234H in the Act.

 

If any person who is required to inform his Aadhaar under sub-section (2) of section 139AA, fails to do so on or before a notified date, he shall be liable to pay a fee exceeding Rs. shall be liable to, as may be prescribed, at the time of giving notice under sub-section (2) of section 139AA after the date notified in accordance with this new section.

The CBDT has announced that linking PAN with Aadhaar number will attract a penalty of Rs 500 for the first three months (till June 2022) and Rs 1,000 thereafter.

 

“Further, Rule 114AAA of the Income Tax Rules specifies that if the PAN of a person has become inoperative, he shall not be able to furnish, inform or quote his PAN and such failure shall be liable to all consequences under the Act. shall be liable for the same,” as per the CBDT circular dated March 30, 2022.

If a person’s PAN becomes inactive, it will have the following consequences:

 

(i) Individual will not be able to file tax return with invalid PAN.

(ii) Returns that have not been processed will not be processed.

(iii) Inactive PANs are not eligible for pending refund.

(iv) When PAN is inactive, pending processes, such as defective returns, cannot be completed.

(v) As soon as the PAN becomes inoperative, the tax will have to be deducted at a higher rate.

Since PAN is an important KYC criterion for many types of financial transactions, the taxpayer may face problems in filling other forms.

PAN-Aadhaar linking deadline

With the CBDT’s latest deadline extension, assessees who have not yet reported their Aadhaar will be able to use their PAN cards for actuarial operations such as filing income returns and processing refunds by March 31, 2023.

However, if a taxpayer fails to link his PAN with his Aadhaar by March 31, 2023, his PAN will become inoperative and he will be liable to all the penalties of the Act for not providing, notifying or quoting his PAN. will be subject to After informing the prescribed authority of Aadhaar and payment of the prescribed value, an inoperative PAN can be reinstated.

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