You will have to shell out penal charges of Rs 500 to Rs 1,000 if you fail to link your Permanent Account Number (PAN) and Aadhaar within two days. March 31 is the deadline for completing this exercise.
Penalty for failure to seed PAN with Aadhaar by March 31
The Central Board of Direct Taxes (CBDT) has decided to impose a fine of Rs 500 if you miss this deadline but complete the seeding process within three months – that is, by June 30, 2022. If you cannot do so, you will be charged double the penal fee.
Non-linked PAN to be inoperative after March 31, 2023
However, the CBDT has clarified that non-linked PAN will continue to be valid till March 31, 2023. Your PAN will become inoperative if the linking process is not complete. “Any failure may lead to the PAN becoming inoperative, which means that a person had no PAN for income tax purposes. Taxpayers should check the income tax portal and ensure that the Aadhaar and PAN are linked. NRIs may have some concerns since, in some cases, they do not have Aadhaar,” said Amit Maheshwari, Tax Partner, AKM Global, a tax and consulting firm.
Consequences of non-compliance
An inoperative PAN can be catastrophic for several financial transactions. “For one, you will not be able to file your income tax returns without the PAN,” says chartered accountant Karan Batra, Founder, Chartered Club. Also, your mutual fund SIP transactions will not go through. Not seeding your PAN with Aadhaar will also have repercussions on your mutual fund transactions. Markets regulator Securities and Exchange Board of India (SEBI) had earlier said that investments of only those investors whose PAN is mapped to Aadhaar would be operational. You will not be able to open a new broking or Demat account unless your PAN and Aadhaar are linked.