Critical Deadline: Link your PAN and Aadhaar now to avoid potential consequences

New Delhi, June 30: The Central Board of Direct Taxes (CBDT) has set a deadline of June 30, 2023, for taxpayers to link their PAN with Aadhaar. It is mandatory for all taxpayers to complete this linking process; otherwise, their PAN will become inoperative starting from July 1, 2023.

Recognising PAN as the primary identification number for transactions in the securities market, the capital markets regulator, Sebi, has also directed existing investors to link their PAN with Aadhaar to ensure uninterrupted participation in securities market transactions.

The decision to link PAN with Aadhaar was made by the income-tax department to address cases where individuals were allocated multiple PANs or where one PAN was assigned to multiple individuals. By requiring eligible taxpayers to provide their Aadhaar details in the PAN application form and income tax returns, the aim is to establish a robust method for de-duplicating the PAN database.

PAN-Aadhaar Linkage Mandatory for PAN Holders

In accordance with a circular released by the Central Board of Direct Taxes (CBDT) in March 2022, it is imperative for all individuals who were allocated a PAN (Permanent Account Number) on or before July 1, 2017, to link their PAN with their Aadhaar Number. This linking process is necessary to establish a connection between the Aadhaar and PAN databases. Failure to comply with this requirement by the deadline of June 30, 2023, will result in the PAN becoming inoperative.

Under the provisions of the Income-tax Act, it is essential for every PAN holder falling within the specified category to intimate their Aadhaar Number. By linking the two identification numbers, the income-tax department aims to streamline and authenticate taxpayer information. This measure helps prevent instances of duplicate PANs or situations where a single PAN is allotted to multiple individuals.

To ensure compliance and avoid any potential repercussions, individuals who hold a PAN issued on or before July 1, 2017, must complete the PAN-Aadhaar linking process within the stipulated timeframe. Failing to do so will render the PAN inoperative, leading to potential difficulties in conducting various financial and official transactions.

It is advisable for PAN holders to promptly link their PAN with Aadhaar through the designated online portals or offline modes as specified by the income-tax department. By adhering to this mandatory requirement, individuals can avoid any inconvenience or legal consequences associated with an inoperative PAN.

Consequences of Failing to Link PAN with Aadhaar by June 30

Failing to link PAN (Permanent Account Number) with Aadhaar by the deadline of June 30 carries significant implications under the Income-tax Act. If an individual does not complete the PAN-Aadhaar linking process, their PAN will become inoperative. This has several repercussions, including:

Inability to File Income Tax Returns: Individuals will not be able to file their income tax returns using the inoperative PAN. This hinders the timely submission of tax-related documents and compliance with tax obligations.

Processing of Pending Returns: Any pending income tax returns associated with the inoperative PAN will not be processed. This can result in delays, penalties, and potential legal consequences.

Delayed Refunds: Refunds due to individuals with an inoperative PAN cannot be issued. This can lead to financial hardships and complications in managing personal finances.

Pending Proceedings: If there are pending proceedings, such as those related to defective returns, they cannot be completed once the PAN becomes inoperative. This may result in unresolved tax matters and further complications in the future.

Higher Tax Deduction: In the absence of a linked and operative PAN, tax deductions will be applied at a higher rate. This can lead to increased tax liability and reduced income.

Moreover, the non-linkage of PAN and Aadhaar can create challenges in various financial transactions, particularly with banks. PAN serves as a crucial Know Your Customer (KYC) criterion for such transactions. Therefore, individuals may face difficulties or restrictions when performing banking operations due to the inoperative PAN status.

To avoid these consequences, it is essential to complete the PAN-Aadhaar linking process before the specified deadline. By ensuring compliance, individuals can maintain their financial stability, fulfill their tax obligations, and prevent any disruptions in their financial activities.

SEBI's Mandate: PAN-Aadhaar Linkage for Investors Explained

The Securities and Exchange Board of India (SEBI) has introduced a mandatory requirement for investors to link their PAN (Permanent Account Number) with their Aadhaar number. This move is aimed at ensuring valid Know Your Customer (KYC) compliance for all participants in the securities market. Let's delve into the reasons behind this decision and its implications.

PAN is the primary identification number utilized for all transactions in the securities market. It serves as a crucial element of the KYC process, enabling regulatory authorities and market entities to verify the identity of investors. To maintain transparency, prevent fraudulent activities, and enhance the integrity of the securities market, SEBI has mandated the linking of PAN with Aadhaar.

By linking PAN with Aadhaar, SEBI seeks to establish a robust and reliable mechanism to validate the identity of investors and ensure compliance with KYC norms. This requirement applies to all SEBI-registered entities and Market Infrastructure Institutions (MIIs) that facilitate transactions in the securities market. It is essential for these entities to maintain accurate and up-to-date KYC records for all participants.

For existing investors, it is imperative to comply with the PAN-Aadhaar linkage within the specified timeline. This is crucial to facilitate uninterrupted and smooth transactions in the securities market. Non-compliance with this requirement can have significant consequences, as outlined in the CBDT (Central Board of Direct Taxes) circular issued on March 30, 2022.

Investor accounts that have not linked their PAN with Aadhaar within the specified timeframe will be considered non-KYC compliant. As a result, restrictions may be imposed on securities and other transactions until the PAN and Aadhaar linkage is completed. To avoid any disruptions or limitations on their investment activities, investors must promptly adhere to the mandated PAN-Aadhaar linking process.

Overall, SEBI's decision to make PAN-Aadhaar linkage mandatory for investors in the securities market is driven by the objective of maintaining robust KYC compliance and ensuring the integrity of transactions. By validating the identity of investors through the linkage, SEBI aims to create a secure and transparent investment ecosystem that fosters trust and confidence among market participants.

How to Link PAN with Aadhaar

To link your PAN (Permanent Account Number) with your Aadhaar number, follow the simple steps outlined below:

1. Visit the official website of the income tax department

Go to the official website of the income tax department by typing the URL http://www.incometax.gov.in in your web browser.

2. Locate the Link Aadhaar option

Look for the "Link Aadhaar" option on the website's homepage. This option is specifically provided for PAN-Aadhaar linkage.

3. Click on the Link Aadhaar option

Click on the "Link Aadhaar" option to proceed with the PAN-Aadhaar linking process.

4. Enter PAN and Aadhaar details

On the page that opens, you will be prompted to enter your PAN and Aadhaar details. Carefully input the correct PAN number and Aadhaar number in the designated fields.

5. Verify the entered details

Double-check the accuracy of the PAN and Aadhaar details you have entered to ensure there are no errors or typos.

6. Consent for Aadhaar authentication

You may be required to provide consent for Aadhaar authentication. Follow the instructions provided on the website to complete this step.

7. Generate One-Time Password (OTP)

In some cases, you may need to generate a One-Time Password (OTP) to verify the authenticity of the PAN and Aadhaar linkage. The OTP may be sent to your registered mobile number or email address.

8. Enter the OTP

If you receive an OTP, enter it in the appropriate field to proceed with the PAN-Aadhaar linking process. Make sure to enter the OTP within the specified time limit.

9. Submit the request

Once you have entered the OTP or completed any other required verification steps, submit your PAN-Aadhaar linkage request.

10. Confirmation message

After successfully submitting the request, you should receive a confirmation message stating that your PAN and Aadhaar have been linked. Keep a record of this confirmation for future reference.

It is important to note that the income tax department's website may undergo updates or changes in the linking process. Therefore, it is recommended to follow the instructions and guidelines provided on the website itself for the most accurate and up-to-date information on how to link PAN with Aadhaar.

By following these steps, you can easily link your PAN with your Aadhaar number and ensure compliance with the PAN-Aadhaar linkage requirement set by the income tax department.

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