What will happen if you Don’t Link your PAN with Aadhar?

In this article, we have covered all the consequences of the Non-Linking of PAN & Aadhar. Please note that as per section 139AA in case of failure to link PAN with the Aadhaar number the Permanent Account Number [PAN] allotted to the person shall be made inoperative. As of now the due date for linking PAN & Aadhar is 31st March 2022.

To Avoid Misuse of Aadhaar Card, Lock and Unlock it When Needed

Fine for Non-Linking PAN & Aadhaar up to 31st March 2022

Linking a PAN card with Aadhaar from April 1 could attract a fine of up to Rs 1,000. The government has fixed March 31 this year as the last date for linking PAN with Aadhaar.

Minister of State for Finance Pankaj Choudhary told Parliament in response to a question related to PAN-Aadhaar link that a new section 234-H has been added in the Income Tax Act, 1961 to complete this process.

Where Can I Link PAN with Aadhar?

Here is the Link

Below are the consequences of Non-Linking PAN & Aadhar:

1. PAN card cannot be used as proof of Identity

Nowadays PAN Card is widely accepted as proof of Identity. Invalid PAN, definitely cannot be used as proof of Identification.

2. TDS @20% will be deducted by your customer/payee

Inoperative PAN is as good as no PAN. In case the deductee does not hold a valid PAN, Deductor is supposed to Deduduct TDS @20%. [Section 206AA]

You May Also Refer: TDS Rates applicable in case of non-liking of Aadhaar or non-compliance due to non-filing of ITR

3. You will not be able to claim the TDS or TCS

TDS/TCS deducted by Payee is linked with PAN of Deductor which is reflected in 26AS of the Deductee when Deductor files return. Obviously, in case, a deductee with no Permanent Account Number [PAN] cannot claim TDS or TCS.

You May Also Refer to: TCS Rate applicable for Financial Year 2021-22

You May Also Refer to: TDS Rate applicable for Financial Year 2021-22

4. You will not be able to file your Income Tax Return [ITR]

PAN is the First thing you need to file Income Tax Return. Without PAN a taxpayer cannot file Return of Income Tax which will further lead to various other Non-compliance. To Denote some:

TDS Rate in the case of Non-Filing of ITR

Section 206AB  was introduced by Finance Act 2021. As per this Section, the TDS Rate of

• twice the rate specified in the relevant provision of the Act; or
• twice the rate or rates in force; or
• the rate of five percent

Whichever is higher will be applicable in the case of the Specified non-filers of income tax return [ITR]. Read the Article TDS Rates applicable in case of non-liking of Aadhaar or non-compliance due to non-filing of ITR for Deep Understanding.

Refunds can be processed only if you File ITR

If your TDS has been deducted and you don’t file ITR, you will not get an Income Tax Refund even if your Excess TDS has been deducted.

Carry Forward of Loss

Losses cannot be carried Forwarded in case of Non-Filing of ITR [Income Tax Return] on or before the due date of Return of Income Tax as per Section 139.

You May Also Refer: Extended Due Dates for compliance under Income Tax

Difficulties in Getting Bank Loan

ITR is the primary document demanded by Bank in case you want to avail bank loan. The taxpayer will Face Difficulty in availing Bank Loan in case of non-filing of ITR.

These are just very few consequences. In today’s time, if you want to do business, you just cannot escape the compliance of Filing ITR.

5. GST Number will become Invalid.

Your Permanent Identification Number [PAN] is the base of your GST Number. You need a valid PAN for Goods & Service Tax Number. Else Your GST Number will be canceled. Without a Valid GST Number, one cannot make a Taxable Supply under the Goods & Service Tax Act if you are crossing the threshold of Section 22 of the CGST Act or are compulsorily required to get registered as per Section 24 of CGST Act. Also if you are carrying business on your name, then due to cancellation/suspension/disablement of PAN, you will not be able to generate an E Waybill. All the non-compliances in GST will also fall upon you in case you don’t have a PAN.

6. You will not be able to trade on the stock exchange;

You need a valid PAN for opening a DEMAT Account. Without Valid PAN Stock Market Trading is not Possible.

7. DIN number allotted under Companies Act 2013 and LLPIN used in LLP Act would be invalidated

Director Identification Number [DIN] and  Limited Liability Partnership Identification Number [LLPIN] are linked with your PAN. Without Valid PAN, the same would be invalidated.

8. Overseas remittances would pose challenges;

Without a valid PAN, you cannot make overseas Remittance where you are required to issue bank Form 15CA.

7. IEC number could be suspended.

Again Import Export Code or IEC number is liked with PAN and, your IEC number can be suspended in case you don’t hold a valid PAN.

The penalty of Non-Linking PAN & AAdhaar

Besides in the case of Non-Linking, you may be Charged a Fine of Rs. 10,000 as per Section 272B of the Income Tax Act.

These are just some of the consequences. The list is exhaustive, not inclusive. Go link your PAN with Aadhaar now. Don’t wait for tomorrow.