Not linking Permanent Account Number (PAN) with Aadhaar card by the March 31 deadline may cost you. You will not only be liable to pay a fine of up to Rs 1,000 but your PAN will also become invalid.
This is part of a new amendment introduced in the Finance Bill, 2021 passed by the Lok Sabha on Tuesday. While passing the Finance Bill, 2021, the government inserted a new section (Section 234H) into the Income Tax Act, 1961 for penalising individuals who do not link PAN with Aadhaar card by March 31, 2021.
The penalty amount could be lower than Rs 1,000 but it will not be higher, as per the law. The government will specify the amount of penalty that will be levied from individuals who fail to link PAN and Aadhaar card within the specified deadline.
Other than the fine, an individual’s PAN will also become inoperative. In such a situation, an individual will not be able to conduct financial transactions where quoting PAN is necessary.
The government has given several extensions to link PAN with Aadhaar card in the past. However, it is unlikely to give any more extensions and wants to penalise those who fail to complete the process.
An invalid PAN will cause bigger problems as individuals will not be able to file income tax and face higher penalty for non-compliance. It may be noted that it is mandatory for each person to quote Aadhaar card number in their income tax return and in the application for PAN allotment.
Tax experts said an inoperative PAN could also lead to a higher rate of tax deducted at source (TDS). Under the Income Tax Act, a person who does not furnish a PAN or gives details of inoperative PAN will have to pay higher TDS or TCS.
