Taxpayers must perform Aadhaar PAN linkage by 31st May 2024. Being an ambitious initiative of the Indian government, this linkage aims to enhance transparency and plug revenue leakage. It also helps prevent tax evasion by ensuring that the financial transactions of individuals are accurately monitored and reported.
Moreover, it facilitates seamless filing of income tax returns online and simplifies the verification processes. Let’s understand how you can do Aadhaar PAN linkage in easy steps.
Aadhar Pan Linkage: Latest update
It is worth mentioning that the deadline for Aadhaar PAN linkage was initially set for 30th June 2023, after which any unlinked PAN would become inoperative starting 1st July 2023. However, the Income Tax Department revised this date of linkage to 31st May 2024.
If the linking is not done by this new deadline, any tax deductions or collections (TDS/TCS) will be at higher rates under Sections 206AA and 206CC of the Income Tax Act, 1961. These higher rates apply because of making transactions using inoperative PAN before 31st March 2024.
Linking of Aadhaar with PAN is mandatory
According to Section 139AA of the Income Tax Act, anyone who has been assigned a Permanent Account Number (PAN) and is eligible to get an Aadhaar number must link their PAN with Aadhaar.
If this Aadhaar PAN linkage is not done, the PAN will be deemed "inoperative." Consequently, taxpayers will have to face several financial repercussions, such as:
- Deduction of Tax Deducted at Source (TDS) at higher rates.
- Deduction of Tax Collected at Source (TCS), even for cash withdrawals.
- Forms 15G and 15H (used to declare income below the taxable limit) will not be accepted, and all the previously submitted forms will be rendered invalid.
- You cannot open and process transactions in Demat accounts.
- Restrictions on investing in RBI Bonds and Sovereign Gold Bonds (SGBs).
Also, please be aware that if your PAN and Aadhaar are not linked, the Income Tax Department will not process your income tax returns until the linking is completed.
Also read: Income tax slab for FY 24-25
How to link Aadhaar Card with PAN card?
Aadhaar PAN linkage is mandatory in India. This initiative was started by the government and aims to:
- Eliminate revenue leakage
and - Ensure efficient tax administration
For the uninitiated, PAN is a 10-digit alphanumeric number issued by the Income Tax Department. It is crucial for tax-related transactions and serves as the primary ID proof. On the other hand, Aadhasr is a 12-digit unique identification number (UIN) issued by the UIDAI. It serves as both identity and address proof.
It must be noted that Aadhaar PAN linkage ensures that all financial transactions are accurately monitored. This prevents the chances of tax evasion and promotes transparency. You can initiate the process to link your Aadhaar with PAN:
- Through SMS
- By using online methods available via the Income Tax e-filing portal
- While making a new PAN application
Online process to link Aadhaar card with PAN card
Aadhaar PAN linkage is a simple process and is accessible to all citizens. You can perform this linking using any of the three methods mentioned below:
Method 1 - Without logging In
- Step I: Visit the Income tax website
- Go to the official website of Income Tax e-filing
- Click on the option "Link Aadhaar”
- Step II: Enter details
- Provide your
- PAN number
- Aadhaar number
- Enter your exact name as per Aadhaar.
- You need to make sure that the gender and date of birth on both Aadhaar and PAN match exactly.
- Next, click on "Link Aadhaar”.
- Provide your
- Step III: OTP Verification (in case of mismatch)
- If there is a minor name mismatch, an Aadhaar OTP will be needed.
- Submit the OTP and proceed.
It must be noted that if the name on the Aadhaar differs completely from the name on the PAN card, the linking will fail. Now, you will be prompted to update the name in either the PAN or Aadhaar database.
Method 2 - By logging In
- Step I: Registration
- Register yourself on the Income Tax e-filing portal.
- If you already have a valid registration, you can avoid this step.
- Step II: Login
- Log in to the e-filing portal.
- To do this, you will need to enter your:
- Login ID
- Password, and
- Date of birth
- Step III: Profile settings
- Go to the "Profile Settings" tab.
- Find the option "Link Aadhaar" (usually appears at the end) and click on it.
- Step IV: Verify details
- Now, the following details (taken from your registration) will automatically appear:
- Name
- Gender
- Date of birth
- Cross-check these details with those on your Aadhaar card.
- Now, the following details (taken from your registration) will automatically appear:
- Step V: Enter Aadhaar details
- If the details match, enter your Aadhaar number and the captcha code.
- Then, click on the "Link Aadhaar" button.
- Step VI: Confirmation
- A pop-up message will confirm that your Aadhaar card has been successfully linked to your PAN card.
Method 3 - Via SMS
The Income Tax Department also provides the option to link your Aadhaar with your PAN using a simple SMS process. To start the process:
- Send an SMS to 567678 or 56161
- Use this SMS format - UIDPAN <12 digit Aadhaar card Number><10 digit PAN card number>
- For example,
- Say your Aadhaar card number is 123456789123 and PAN number is XYZA2124M
- Now, you will send this SMS: 123456789123XYZA2124M to either 567678 or 56161
- If there is no mismatch in the records, the Aadhaar PAN linkage will be completed successfully.
- Otherwise, in case of a minor mismatch, you will need to use the online methods (either Method 1 or Method 2).
Also read about: How to check mutual fund status with folio number
Importance of linking Aadhaar card with PAN card
Aadhaar PAN linkage is mandatory and important for several reasons. It is worth mentioning that both Aadhaar and PAN serve as essential proof of identification. They are often required for verification and registration purposes across various services, such as:
- Opening Provident Fund accounts (PFAs)
- Opting for a phone number
- Opening bank accounts, and
- Filing income tax returns
Thus, the government has mandated linking Aadhaar with PAN as it will help them prevent tax evasion and administer taxes more effectively. By linking these IDs, the government can:
- Track taxable transactions more accurately
and - Ensure that individuals and entities cannot evade taxes by misreporting their financial activities.
Moreover, linking Aadhaar with PAN simplifies the process of filing income tax returns. It enables individuals to file e-returns seamlessly on the income tax portal and eliminates the need to submit income tax acknowledgements separately.
How to check if your Aadhaar is linked to your PAN card?
If you are unsure whether your PAN and Aadhaar are linked, you can follow these steps to check their status:
- Visit the Income Tax e-filing portal.
- Click on the "Link Aadhaar Status" option under the quick links on the homepage.
- Enter your PAN and Aadhaar numbers and click "View Link Aadhaar Status."
If your PAN and Aadhaar are not linked, you will see a message indicating this. You can then follow the necessary steps to link them. If they are already linked, you can proceed with filing your income tax returns.
Furthermore, please note that if your PAN was not linked with Aadhaar by the deadline, it would have become “inoperative”. Now, you will be required to reactivate it by:
- Paying a penalty
and - Requesting the Aadhaar PAN linkage
How to link your PAN to your Aadhaar after the deadline?
For the uninitiated, the original deadline for Aadhaar PAN linkage was 30th June 2023. In case you failed to link the two by this deadline, you can still link your Aadhaar with PAN using these two steps:
I. Payment of penalty
Since you missed the deadline, you must now pay a penalty to request linking. You can do so by following these steps:
- Visit the Income Tax e-Filing Portal.
- Click on the ‘e-Pay Tax’ option under ‘Quick Links’.
- Enter your PAN number and confirm it.
- Provide your mobile number and click ‘Continue’.
- Verify your identity using the OTP sent to your mobile.
- On the e-Pay Tax page, click ‘Continue’ under the ‘Income Tax’ tab.
- Make the following selections:
- Assessment Year as ‘2025-26’
- Type of Payment as ‘Other Receipts (500)’
- Sub-type as ‘Fee for delay in linking PAN with Aadhaar’.
- Now, click ‘Continue’, and the penalty amount will be pre-filled.
- Proceed and complete the payment using one of the authorised banks listed.
II. Submit online/offline requests for linking of Aadhaar number and PAN
To perform Aadhaar PAN linkage, you can follow either of these two steps:
Method 1: Without logging in
- Go to the Income Tax e-filing portal.
- Click on the ‘Link Aadhaar’ tab under quick links.
- Enter your PAN and Aadhaar numbers and click ‘Validate’.
- Enter your name as per your Aadhaar card and mobile number, then click ‘Link Aadhaar’.
- Enter the OTP sent to your mobile and click ‘Validate’.
- If payment details are not verified, follow the prompt to pay the fee via “e-Pay Tax”.
- Once the payment is processed, usually within 30 minutes to an hour, you can complete the linking request.
Method 2: By logging in
- Register on the Income Tax e-filing portal (ignore this step if you have already registered).
- Log in using your user ID and password.
- Click on ‘Link Aadhaar’ or go to ‘My Profile’.
- Now, select the ‘Link Aadhaar’ option available under ‘Personal Details’.
- Enter your Aadhaar number and click ‘Validate’.
- A pop-up will confirm that your Aadhaar has been successfully linked to your PAN.
Some important points:
- Please ensure you have your Aadhaar card, PAN card, and mobile number handy.
- Reactivating an inoperative PAN after linking with Aadhaar may take 7 to 30 days from the date the request is submitted.
Aadhaar-PAN linkage no longer mandatory for mutual fund investors
The Securities and Exchange Board of India (SEBI) has simplified the "Know Your Customer (KYC)" process for mutual fund investors by removing the requirement to link Aadhaar with the Permanent Account Number (PAN). This change was announced in a circular on May 14. It aims to make client transactions more efficient and enhance risk management. To understand better, let’s have a look at some key points from the circular:
- The acceptance of KYC details from official databases, such as the Income Tax Department records on PAN, Aadhaar, and Digilocker, as validated by KYC registration agencies (KRAs).
- KRAs are now required to verify KYC details such as PAN, name, and address within two days of receiving them.
It is mandatory for the intermediaries to implement these changes starting from May 31, 2024.
Also read about: How to do mutual funds KYC
Conclusion
Aadhaar PAN linkage is a critical requirement mandated by the Indian government to enhance transparency in financial transactions and ensure effective tax administration. This initiative prevents tax evasion by monitoring financial activities more accurately.
Previously, the last date to link Aadhaar with PAN was 30th June 2023, after which all unlinked PANs would have become “inoperative”. This date was extended to May 31, 2024, to request linking after paying the penalty. This linking process can be initiated through various methods, including online portals (both by logging in and without logging in) and by sending an SMS.
Still, taxpayers who fail to do Aadhaar PAN linkage by this date face several financial repercussions, such as being charged TDS at higher rates, being unable to submit form 15G/15H and restrictions on the processing of transactions in the Demat account. Also, the Income Tax Department will not process their income tax returns until the linking is completed.
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