New Delhi : Aadhaar card and PAN card hold significant importance when it comes to establishing our identity. While PAN card is primarily used for tax purposes, the Aadhaar card serves a multitude of functions. It is important to note that as per the directive from the Government of India, linking your PAN card with Aadhaar has become mandatory. Fortunately, you can complete this process conveniently online. A PAN card consists of a 10-digit alphanumeric number and serves as a unique identification for all taxpayers. The Income Tax Department relies on the PAN number to monitor financial transactions. Additionally, banks and other financial institutions utilize the PAN card for identification purposes. On the other hand, the Aadhaar card, issued by the Unique Identification Authority of India, consists of 12 digits and includes your name, date of birth, gender, home address, and biometric information. The Aadhaar card serves as a valid proof of identity and is required for various services such as opening a bank account or obtaining a loan.

PAN card is now a mandatory requirement

Under section 139AA of the Income Tax Act, 1961, the Finance Act of 2017 made it compulsory for every individual in India to possess a PAN card. The legislation, effective from July 1, 2017, mandates the need for a PAN card.

Link your PAN with Aadhaar

It is crucial to link your PAN card with Aadhaar as soon as possible to comply with the government’s directive. The last date to complete this linking process is June 30, 2023. While the government has not yet announced any decision regarding the extension of this deadline, it is advisable to act promptly. Failure to link your PAN card with Aadhaar will render your PAN card inactive, thereby rendering it unusable as a valid document. Furthermore, non-compliance with the Aadhaar-PAN linking requirement may result in the imposition of fines, which could also impact your Tax Deducted at Source (TDS) rate.

Implications on TDS

Not linking your PAN card with Aadhaar can have significant implications on your TDS. Let us explore how this non-compliance can affect your TDS:

  1. Inability to file pending returns: Failure to link your PAN with Aadhaar will prevent you from filing any pending returns. Additionally, you will not be eligible for any refunds.
  2. Inability to file ITR return: Non-compliance with the linking requirement will prohibit you from filing any type of return. It is important to note that the deadline for filing the Income Tax Return (ITR) this year is July 30, 2023.
  3. No interest on refunds: Once your PAN card is deactivated due to non-compliance, you will not receive any interest on any pending tax refunds.
  4. Rejection of tax refund applications: If you have applied for a tax refund and your PAN card is deactivated, your application will be rejected.
  5. Reactivation process: In the event of your PAN card becoming inoperative, you will need to reactivate it within 30 days by paying a fee of Rs 1,000.
  6. Increased TDS rate: Once your PAN becomes inoperative, the TDS rate on your income will exceed 20%. Conversely, the TDS on any other income will be less than 1 percent.

In conclusion, it is of utmost importance to link your PAN card with Aadhaar to avoid any adverse consequences. Failure to do so can lead to the deactivation of your PAN card, difficulties in filing returns, rejection of refund applications, and an increased TDS rate on your income. Take the necessary steps to ensure compliance and avoid any unnecessary penalties or inconveniences.


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