What Penalty Will You Have To Bear If You Don't Link PAN With Aadhaar Number?

According to government regulation, it is mandatory to link Pan with Aadhaar Number. The Finance Act, 2017 had inserted a new Section 139AA in the Income-tax Act, 1961, requiring every person who is eligible to obtain the Aadhaar to quote his Aadhaar number while applying for PAN or furnishing a return of income. Section 139AA further provides that every person who has been allotted PAN as on July 1, 2017, and who is eligible to obtain the Aadhaar number, should intimate his/her Aadhaar number. In case of failure to intimate the Aadhaar number, PAN allotted to the person shall be made inoperative after the date so notified.

Consequences for not linking PAN with Aadhaar Number

The Central Board of Direct Taxes has notified Rule 114AAA prescribing the manner and consequences if PAN becomes inoperative. The Rule 114AAA(2) provides that where a person, whose PAN has become inoperative, it shall be viewed as that he/she has not furnished, intimated, or quoted the PAN, as the case may be, and he/she shall be liable for all the consequences under the Act for not furnishing, intimating or quoting the PAN. However, the person can reactivate his PAN by subsequently intimating his Aadhaar to the Department.

Further, if a person fails to link PAN-Aadhaar by the due date, he shall be liable to pay a fee, a maximum of Rs. 1,000 under section 234H. If a person intimates his Aadhaar number after the due date, then he/she shall be liable to pay a fee of Rs. 500, if such intimation is made between April 1, 2022 and June 30, 2022; or she/she will have to pay Rs. 1,000, in all other cases.

The CBDT has notified that all the consequences provided under the Income-tax Act for not furnishing, intimating, or quoting PAN shall come into effect from April 1, 2023 if PAN becomes inoperative due to non-linking of it with Aadhaar.