Aadhaar PAN linking | PAN Aadhaar linking: 5 consequences if PAN becomes inoperative


The deadline to link your PAN with Aadhaar has been extended from March 31, 2022 to March 31, 2023. However, starting April 1, 2022, linking your PAN and Aadhaar will cost you money.

The Central Board of Direct Taxes (CBDT) notified this via a notification dated March 29, 2022, as well as a press release on March 30, 2022. The Finance Act of 2021 added a new section 234H to the Act to complete the PAN-Aadhaar connecting procedure for detecting fake PANs.

This section states that if a person who is required to intimate his Aadhaar under subsection (2) of section 139 AA fails to do so on or before a notified date, he will be liable to pay a fee of not more than Rs 1,000, as may be prescribed, at the time of making intimation under subsection (2) of section 139AA after the notified date.

According to the CBDT circular dated March 30, 2022, “Further, rule 114AAA of the Income-tax Rules provides that if PAN of a person has become inoperative, he will not be able to furnish, intimate or quote his PAN and shall be liable to all the consequences under the Act for such failure.”

According to the circular, this will have a number of implications such as:-

(i) The person shall not be able to file a return using the inoperative PAN

(ii) Pending returns will not be processed

(iii) Pending refunds cannot be issued to inoperative PANs

(iv) Pending proceedings as in the case of defective returns cannot be completed once the PAN is inoperative

(v) Tax will be required to be deducted at a higher rate as PAN becomes inoperative.

Furthermore, because PAN is an important KYC criterion for all types of financial transactions, the taxpayer may have difficulties at a variety of other fora, such as banks and other financial websites.

It is also clarified that, “ where a person. whose permanent account number has become inoperative under sub-rule (1). is required to furnish. intimate or quote his permanent account number under the Act. it shall be deemed that he has not furnished. intimated or quoted the permanent account number. as the case may be. in accordance with the provisions of the Act. and he shall be liable for all the consequences under the Act for not furnishing. intimating or quoting the permanent account number.”



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