Linking of Aadhar to PAN

This is a hot subject which requires your attention, please!

Section 139AA of the Income Tax Act makes it mandatory for every individual who has a PAN to link it with the Aadhar number.

Every rule has certain exceptions. As per the Notification issued by CBDT in 2017, the provisions of 139AA shall not apply to the following individuals who do not possess an Aadhar number or an Enrolment ID –

• A Non-Resident Indian (NRI) or
• An Individual aged 80 years or more; or
• Not a citizen of India

FAQ 1 – I am an NRI, holding an Aadhar card. Should I link it with the PAN?

An NRI does not need to obtain an Aadhar card and link it with the PAN. However, if any NRI already holds Aadhar Number, then he has to link with PAN in the Income Tax portal.

FAQ 2 – What is the due date to link the Aadhar number?

The last date to link Aadhar number with PAN is 31^st March 2021. (further extended to 30th June 2021)

FAQ 3 – What happens if I fail to link before the due date?

As per Section 234H, if a person who is required to intimate the Aadhar fails to do so, he shall pay a fee of Rs.1000 for default in intimating the Aadhar Number. This means, one can link the number after the last date, but with a fee of Rs.1000.

FAQ 4 – Any other consequences?

As per the Notification of CBDT, if a person has failed to intimate the same as per the notified date, the PAN of such person shall become inoperative immediately after the said date. This means, PAN will be inoperative from 1^st July 2021, if linking is not done!

However, the PAN shall become operative from the date of intimation of Aadhar.

For example –

• A fails to Link Aadhar with PAN on or before 31^st March 2021
• His PAN will be inoperative from 1^st April 2021
• He pays a fee of Rs.1000 and links Aadhar on, says, 10^th May 2021, his PAN becomes operative from that date.

FAQ 5 – Any impact on TDS rate?

Yes. As per Section 206AA, if PAN is not quoted, TDS will be deducted at a higher rate. For example, interest on Bank Fixed Deposit attract TDS at 10% and if PAN becomes inactive (due to non-linking of Aadhar), the banker is obliged to deduct TDS at 20%.

FAQ 6 – Any impact on Filing returns?

Yes. If PAN becomes inactive, one can’t file Income-tax Return. If ITR is not filed, then there is a penalty of Rs.10,000 u/s 272B for non-filing of return.

Even after the above clarification, there will be a follow-up question by NRI and OCI friends.

FAQ 7 – I am an NRI and my friend is OCI, my neighbor is a foreigner. Should they obtain Aadhar and link with PAN?

• NRI is exempted from obtaining Aadhar Card. Hence, NRIs are exempted from linking Aadhar to PAN. But as I said in the beginning if one has Aadhar, then it has to be linked with PAN.
• The same exemption applies to OCI cardholders and foreign taxpayers in India.

Linking Aadhar to PAN is a simple process. So, go ahead and comply with the rules. In case you need any assistance, please contact me at prasad@balakrishnaandco.com

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