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You Will Have To Pay Extra Taxes If PAN Is Not Linked To Aadhaar By March 31


The deadline for PAN-Aadhaar linking is just a week away, March 31, and if these two key documents are not linked by then, your permanent account number or PAN will become inoperative from April 1 and in that case, you will have to pay extra taxes to the government. Yes, you read it right!

According to a CBDT circular dated March 30, 2022, “Tax will be required to be deducted at a higher rate as PAN becomes inoperative.”

Explaining this, Maneet Pal Singh, partner at I.P. Pasricha & Co, told News18.com, “If your PAN (permanent account number) is not linked with Aadhaar by the deadline of March 31, 2022, then your PAN will become inoperative. As a result, the tax deducted at source (TDS) for that person will be higher at 20 per cent or the applicable rate, whichever is higher, instead of the normal rate of TDS.”

The normal TDS rate is as low as 1 per cent on various incomes and investments. Tax deducted at source (TDS) is deducted from income at its source, including bank deposit interest, rents, consultation fees, commissions, cryptocurrency or virtual digital assets, and stamp duty, among others.

Explaining with example, Singh said suppose a person has an annual income of Rs 10 lakh and his normal TDS rate is 10 per cent. If their PAN is not linked with Aadhaar by the deadline, their PAN will become inoperative, and the TDS rate will increase to 20 per cent.

“In this case, the person will have to pay an additional TDS of 10 per cent on Rs 10 lakh since their PAN is not linked,” he said.

An independent tax practitioner also said that the normal TDS rate on virtual digital assets and immovable property is 1 per cent. However, if PAN is not linked with Aadhaar by March 31, a TDS of 20 per cent will be levied.

According to the CBDT circular, if a person’s PAN becomes inoperative, “it shall be deemed that he has not furnished, intimated or quoted that permanent account number”.

Also Read: How to Check If Your PAN is Already Linked With Aadhaar?

The CBDT also said if PAN and Aadhaar is not linked, taxpayers might face difficulty at various other fora like banks and other financial portals, as PAN is one of the important KYC criterion for all kinds of financial transactions.

Apart from this, the Following Services Will Also Be Stopped If PAN is Not Linked to Aadhaar by March 31:

1) You will not be able to file tax return using the inoperative PAN

2) Pending tax returns will not be processed

3) Pending tax refunds cannot be issued to inoperative PANs

4) Pending proceedings as in the case of defective returns cannot be completed once the PAN is inoperative

5) Tax will be required to be deducted at a higher rate as PAN becomes inoperative.

How To Link Your Aadhaar Card with PAN:

Via SMS

1. Type “UIDPAN < 12-digit Aadhaar number > < 10-digit PAN > “

2. Send this SMS to 56161 or 567678 using your registered mobile number.

Via Income Tax Department Portal

Step 1: Visit ‘https://www.incometax.gov.in/iec/foportal/’, the e-filing portal of the I-T department.

Step 2: Click on the ‘Link Aadhaar’ option under the ‘Quick Links’ section of the webpage.

Step 3: This will redirect you to a new page where the PAN number, Aadhaar number and other required details like your name need to be entered.

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