PAN not linked with Aadhaar by end of March 2023 to be rendered inoperative: Income Tax Department

Tags: Economy/Finance

PAN not linked with Aadhaar by end of March 2023 to be rendered inoperative: Income Tax Department

The Income Tax department on 24 December 2022 issued an advisory that those permanent account numbers (PAN) which are not linked with Aadhaar by the end of March next year will be rendered "inoperative".

According to the Income Tax department "As per Income-tax Act, 1961, it is mandatory for all PAN holders, who do not fall under the exempt category, to link their PAN with Aadhaar before 31 March 2023. From 1 April 2023, the unlinked PAN shall become inoperative,”

Exempt category 

According to a notification issued by the Union Finance Ministry in May 2017, following persons are exempt from linking their PAN with Aadhaar;

  • Individuals residing in the states of Assam, Jammu and Kashmir and Meghalaya; 
  • a non-resident as per the Income-tax Act, 1961; 
  • Person of the age of 80 years or more at any time during the previous year and a
  •  Person not a citizen of India.

Consequence of a PAN becoming inoperative 

A circular issued by the Central Board of Direct Taxes (CBDT) on 30 March 2022 said once a PAN becomes inoperative, an individual shall be liable to all the consequences under the I-T Act and will have to suffer a number of implications.

  • The person shall not be able to file I-T return using the inoperative PAN;
  •  pending tax returns will not be processed; 
  • pending tax refunds cannot be issued to inoperative PANs; 
  • Pending proceedings as in the case of defective returns cannot be completed once the PAN is inoperative and tax will be required to be deducted at a higher rate.
  • The taxpayer might face difficulty at various other fora like banks and other financial portals as PAN is one of the important KYC (know your customer) criteria for all kinds of financial transactions.

While the 12 digit Aadhaar is issued by the Unique Identification Authority of India to a resident of India, PAN is a 10-digit alphanumeric number allotted by the Income Tax department to a person, firm or entity.

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