PAN-Aadhaar linking deadline is March 31: Who should link, what happens if they don’t

To curb tax evasion and simplify financial transactions, the Central Board of Direct Taxes (CBDT) has issued a final warning to link PAN with Aadhaar before March 31, 2023.

Failure to do so will result in a penalty of Rs 1,000, and an inoperative PAN card, which will prevent all financial transactions.

Why is it necessary

The Securities and Exchange Board of India (SEBI) has also issued a notification stating that without linking the two identity cards, individuals will be unable to carry out any transactions in financial markets such as NSE and BSE.

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For those who haven’t linked their Aadhaar with PAN and have questions about the process, read on. We have provided answers to some of the most frequently asked questions regarding PAN Aadhaar linking to assist you in understanding why and how to begin the process.

By linking Aadhaar with PAN, taxpayers can also benefit from the convenience of using Aadhaar as a single source of identity verification for various financial transactions. It also helps in eliminating the need for multiple documents and simplifies the process of tax filing.

Consequences of not linking

It’s important to note that failing to link Aadhaar with PAN by the deadline of March 31, 2023, can result in the inactivation of your PAN card, making it impossible to conduct any financial transactions. Therefore, it’s recommended to link your Aadhaar with PAN at the earliest to avoid any inconvenience.

The CBDT issued a circular in March 2022, mandating individuals who were allotted a PAN on or before July 1, 2017, to link their Aadhaar number with their PAN. The deadline for linking the two cards is March 31, 2023, after which the PAN will become inoperative if not linked.

Exempted individuals

Non-residents who are not Indian citizens. Individuals who are aged 80 years or above at any time during the tax year. Individuals who reside in the states of Assam, Jammu and Kashmir, and Meghalaya. Individuals who are unable to enrol for Aadhaar due to their physical or mental disability or other reasons as specified by the UIDAI (Unique Identification Authority of India).

The government had initially set March 31, 2022, as the deadline for linking Aadhaar with PAN without any penalty. However, the deadline has been extended with a penalty of Rs 1,000, and citizens are now required to link their Aadhaar with PAN by March 31, 2023.

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Failure to do so will result in the PAN card becoming inoperative, rendering it unusable for any financial transactions, including filing an income tax return.

Linking Aadhaar with PAN is mandatory as per the CBDT, and failing to do so will make the PAN inoperative. Once the PAN becomes inoperative, the individual will not be able to file income tax returns, process pending returns, or receive refunds.

In addition, pending proceedings such as defective returns cannot be completed. Defaulters may face difficulties in other financial transactions, such as with banks, as PAN is a key KYC criterion. If the PAN becomes inoperative, tax will be deducted at a higher rate, and the individual will be liable to all consequences under the Income-tax Act.