Taxpayers have until June 30, 2023, in which to link their permanent account number (PAN) with their Aadhaar number, per the Central Board of Direct Taxes (CBDT). All taxpayers are required to finish the connecting process because failure to do so will result in the PAN being rendered useless as of July 1, 2023.
The capital markets regulator Sebi has also ordered existing investors to link their PAN with their Aadhaar number in order to continue conducting transactions in the securities market since PAN is the only identifying number for all transactions in the securities market.
What justifies tying the PAN to the Aadhaar number?
After discovering cases where numerous permanent account numbers were assigned to a single individual or where one PAN was assigned to more than one person, the income-tax department announced the linkage of PAN with Aadhaar. Aadhaar quoting was made necessary for taxpayers who are qualified to receive them in the PAN and income return application forms in order to have a reliable method of de-duplicating the PAN database.
Who needs their PAN and Aadhaar linked?
Every person who received a PAN as of July 1, 2021, must comply with the Income-tax Act, according to a circular from the Central Board of Direct Taxes (CBDT) that was published in March 2022.
Who needs their PAN and Aadhaar linked?
The Income Tax Act mandates that every individual who has been assigned a PAN as of July 1, 2017, inform the Central Board of Direct Taxes (CBDT) of his Aadhaar Number so that the Aadhaar and PAN can be connected. This requirement was made mandatory by a circular issued by the CBDT in March 2022. In the event that this is not completed by June 30, 2023, the PAN will cease to function.
Who is exempt from the PAN-Aadhaar link requirement?
There are a few groups of people for whom this connection is not necessary.
*Anyone who is 80 years of age or older.
*According to the Income Tax Act.
*An individual who is not an Indian citizen.
What will happen if PAN and Aadhaar are not connected by June 30?
If a person doesn’t connect their PAN to their Aadhaar, their PAN will stop working. The person will be subject to all of the Income-tax Act’s penalties for failing to provide, intimate, or quote his PAN in this situation. Non-compliance has a number of serious consequences, including:
*The individual is not permitted to file an income tax return using an invalid PAN.
*Pending returns won’t be dealt with.
*Inactive PANs cannot receive pending reimbursements.
*Once the PAN is inoperative, ongoing proceedings, such as those involving defective returns, cannot be finished.
*As PAN ceases to be functional, tax will need to be withheld at a higher rate.
In addition to these negative effects, the individual can experience difficulties while conducting other financial transactions, such as those with banks, as PAN is a crucial KYC requirement for these transactions.
