At present in India, PAN Card & Aadhar Card has become the necessity of every person.
Aadhar is a unique number linked to the biometrics of a resident individual and therefore no individual can have a dual aadhar. It avoids fake identities and help to maintain a correct & genuine database of the residents of India. It also enables the government to deliver socioeconomic benefits to the genuine individuals.
PAN i.e. Permanent Account Number, is a unique 10-digit alphanumeric identity number allotted to a person by the Income Tax Department. PAN also act as an identity proof of an individual. At present PAN is mandatory for most of the financial transactions such as purchase of mutual funds, vehicles above a specified limit, receiving salaries & fees above a specified limit etc. Even for opening the Bank Account an individual needs PAN otherwise a declaration need to be given in the absence of PAN. PAN is a measure to track the financial transactions in all over India & keep a check on the tax evasion.
PAN & Aadhar both are the universal identification marks as both are issued universally to an individual & on PAN India basis & cannot be issued separately for every state.
Since last few years, government is asking to every individual to link their PAN & Aadhar & for this purpose, government introduced Section 139AA in the Income Tax Act.
In this section, government said that every person shall mention his Aadhar at the time of applying PAN & will also mention his Aadhar in the return of income.
Also every person would link his Aadhar with the PAN within the specified due date and that due date was extended multiple times for giving some more time to the individual for linking their PAN & Aadhar. Last deadline was 31st March 2022, which is further extended till 31st March, 2023 but with a two tier structure of Late fee.
As per the notification issued by Central Board of Direct Taxes(CBDT), a new Section 234H shall govern the Late Fee for non linking of PAN & Aadhar.
Rs. 500/- shall be charged if PAN & Aadhar is linked within 01st April, 2022 to 30th June, 2022, from 01st July, 2022, Rs. 1,000/- shall be charged as late fee.
Consequences of Non linking of PAN & Aadhar
As per section 139AA, if PAN is not linked with Aadhar within specified due date, it will become invalid & would be deemed like person has not applied for the PAN. Also with an inoperative PAN, an individual will not be able to invest in mutual funds, stocks or open a bank account among many other things.
So it is advisable to link your PAN & Aadhar without any delay.
Text of Section 139AA of the Income Tax Act, 1961
As per section 139AA of the Income Tax Act,
(1) Every person who is eligible to obtain Aadhaar number shall, on or after the 1st day of July, 2017, quote Aadhaar number—
(i) in the application form for allotment of permanent account number;
(ii) in the return of income:
Provided that where the person does not possess the Aadhaar Number, the Enrolment ID of Aadhaar application form issued to him at the time of enrolment shall be quoted in the application for permanent account number or, as the case may be, in the return of income furnished by him.
(2) Every person who has been allotted permanent account number as on the 1st day of July, 2017, and who is eligible to obtain Aadhaar number, shall intimate his Aadhaar number to such authority in such form and manner as may be prescribed, on or before a date to be notified by the Central Government in the Official Gazette:
Provided that in case of failure to intimate the Aadhaar number, the permanent account number allotted to the person shall be deemed to be invalid and the other provisions of this Act shall apply, as if the person had not applied for allotment of permanent account number.