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Central Board of Direct Taxes (CBDT) has extended the last date to link Permanent Account Number (PAN) with Aadhaar to June 30, 2023 vide Income Tax Notification No. 15/2023 Date: 28th March, 2023 by amending Rule 114AAA – Manner of making permanent account number inoperative. CBDT has extended the deadline to link PAN with Aadhaar for the fifth time on Tuesday. “Notification to this effect is being issued separately In a press release released on March 28, 2023, CBDT said, “In order to provide some more time to the taxpayers, the date for linking PAN and Aadhaar has been extended to 30th June 2023, whereby persons can intimate their Aadhaar to the prescribed authority for Aadhaar-PAN linking without facing repercussions.”

Consequences of Non-Linking of PAN with Aadhar:

“Inoperative” PAN – If a person fails to link Aadhar with PAN then such PAN is marked as inoperative/Invalid after June 30, 2023.

Other Penalties & consequences-  Once PAN become inoperative/invalid person will become liable under various other provisions of Act as below :

  • Non filing Return of Income-Taxpayers will not be allowed to furnish the return of income before linking. Non-filing of return will attract a penalty up to Rs 10,000/-  U/s 234F of Income Tax Act 1961.
  • Non-Compliance of Section 139A– It is mandatory to quote PAN for certain financial transactions as per section 139A. If the PAN is not linked it will become inoperative/invalid and this would result in non-compliance with the provisions of Section 139A which would attract a penalty up to Rs 10,000/- u/s 272B.
  • Interest for late filing of Return of Income – Taxpayers will not be allowed to furnish the return of income before linking. Defaults in furnishing return will attract interest u/s 234A, 234B, and 234C.
  • Higher TDS – TDS would be deducted at a higher rate if the PAN is not furnished by the payee U/s 206AA of the Income Tax Act.
  • Higher TCS –  TCS would be collected at a higher rate U/s 206CC if the PAN is not furnished

Can Inoperative PAN become again Operative?

YES. The PAN can be made operative by linking it with Aadhaar on payment of prescribed fee /penalty. PAN will again become operative from the date of linking/intimation of the Aadhaar Number. But the penalty/fees u/s 234H shall be levied when the person will link/intimate the Aadhar after it becomes inoperative.

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Extract of Relevant notification is as follows:-

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)

Income Tax Notification No. 15/2023 Date : 28th March, 2023

G.S.R.227(E).In exercise of the powers conferred by section 139AA read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the

Income-tax Rules, 1962, namely: ‒

1. Short title and commencement.—(1) These rules may be called the Income-tax (Fourth Amendment) Rules, 2023. (2) They shall come into force from the 1st day of April, 2023.

2. In the Income-tax Rules, 1962, for rule 114AAA, the following rule shall be substituted, namely: 

114AAA. Manner of making permanent account number inoperative.—(1) Where a person, who has been allotted the permanent account number as on the 1st day of July, 2017 and is required to intimate his Aadhaar number under sub-section (2) of section 139AA, has failed to intimate the same on or before the 31st day of March, 2022, the permanent account number of such person shall become inoperative, and he shall be liable for payment of fee in accordance with sub-rule (5A) of rule 114.

(2) Where the person referred to in sub-rule (1) has intimated his Aadhaar number under sub-section (2) of section 139AA after the 31st day of March, 2022, after payment of fee in accordance with sub-rule (5A) of rule 114, his permanent account number shall become operative within thirty days from the date of intimation of Aadhaar number.

(3) A person, whose permanent account number has become inoperative, shall be liable for further consequences for the period commencing from the date as specified under sub-rule (4) till the date it becomes operative, namely:–

(i) refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made;

(ii) interest shall not be payable on such refund for the period, beginning with the date specified under sub-rule (4) and ending with the date on which it becomes operative;

(iii) where tax is deductible under Chapter XVIIB in case of such person, such tax shall be deducted at higher rate, in accordance with provisions of section 206AA;

(iv) where tax is collectible at source under Chapter XVII-BB in case of such person, such tax shall be collected at higher rate, in accordance with provisions of section 206CC:

(4) The provisions of sub-rule (3) shall have effect from the date specified by the Board.

(5) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall specify the formats and standards along with the procedure for verifying the operational status of permanent account number under sub-rule (1) and sub-rule (2).”.

[Notification No. 15/2023 F. No.370142/14/2022-TPL]

P. AMRUTHA VARSHINI, Under Secy.

Note.-The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii) vide number S.O. 969 (E), dated the 26th March, 1962 and last amended by the Income-tax (Third Amendment) Rules, 2023, vide notification number G.S.R. 118(E) dated 21st February, 2023.

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Extract of Relevant Press Release is as follows:-

Ministry of Finance

Last date for linking of PAN-Aadhaar extended

Posted On: 28 MAR 2023

In order to provide some more time to the taxpayers, the date for linking PAN and Aadhaar has been extended to 30th June, 2023, whereby persons can intimate their Aadhaar to the prescribed authority for Aadhaar-PAN linking without facing repercussions. Notification to this effect is being issued separately.

Under the provisions of the Income-tax Act, 1961 (the ‘Act’) every person who has been allotted a PAN as on 1st July, 2017 and is eligible to obtain Aadhaar Number, is required to intimate his Aadhaar to the prescribed authority on or before 31st March, 2023, on payment of a prescribed fee. Failure to do so shall attract certain repercussions under the Act w.e.f. 1st April, 2023. The date for intimating Aadhaar to the prescribed authority for the purpose of linking PAN and Aadhaar has now been extended to 30th June, 2023.

From 1st July, 2023, the PAN of taxpayers who have failed to intimate their Aadhaar, as required, shall become inoperative and the consequences during the period that PAN remains inoperative will be as follows:

i. no refund shall be made against such PANs;

ii. interest shall not be payable on such refund for the period during which PAN remains inoperative;  and

iii. TDS and TCS shall be deducted /collected at higher rate, as provided in the Act.

The PAN can be made operative again in 30 days, upon intimation of Aadhaar to the prescribed authority after payment of fee of Rs.1,000.

Those persons who have been exempted from PAN-Aadhaar linking will not be liable to the consequences mentioned above. This category includes those residing in specified States, a non-resident as per the Act, an individual who is not a citizen of India or individuals of the age of eighty years or more at any time during the previous year.

It is stated that more than 51 crore PANs have already been linked with Aadhaar till date. PAN can be linked with Aadhaar by accessing the following link https://eportal.incometax.gov.in/iec/foservices/#/pre-login/bl-link-aadhaar.

 

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Disclaimer: The above article is prepared for understanding & study purpose. We recommend you consult your CA or tax consultant before taking any decision & author will not be responsible for any lose due to decision take based on above article.

You can reach me at ca.rahuldwivedi@gmail.com whatsApp 9004485377.

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