I-T department fresh reminder: Link PAN with Aadhaar by this date to avoid higher TDS. Check details

The Income Tax Department on Tuesday issued a fresh notification to taxpayers to link their Permanent Account Number (PAN) with Aadhaar by May 31, which is this Friday. Posting on X (formerly Twitter), the IT department said that meeting this deadline is important in order to avoid higher tax deductions at source (TDS). 

The Income Tax Department said: "Kind attention taxpayers, please link your PAN with Aadhaar before May 31, 2024... Linking your PAN with your Aadhaar by May 31 ensures you don’t face higher tax deduction/tax collection under Section 206AA and 206CC of the Income Tax Act, 1961, due to an inoperative PAN for transactions entered into before March 31, 2024."

The major impact of a failure to link will be on income tax return (ITR) filing. The last date to file the ITR is July 31, 2024. Before this, CBDT also asked citizens for PAN-Aadhaar linking. In a circular issued on April 23, 2024 (CBDT Circular No. 6/2024), the Central Board of Direct Taxes (CBDT) outlined the regulations and potential consequences of not linking PAN with Aadhaar.

On April 23, 2024, the CBDT issued a circular where it addressed the issue about resolving complaints from deductors/collectors (who have deducted the tax) who collected TDS/TCS at the regular rate but were required to deduct/collect at double the rate due to the deductee’s PAN being inoperative (unlinked with Aadhar) since April 1, 2023. The deductors got tax notices from the Income Tax Department for committing the default of "short-deduction/collection" of TDS/TCS due to such transactions.

“In such cases, as the deduction/collection has not been made at a higher rate, demands have been raised by the Department against the deductors/collectors while processing of TDS/TCS statements under section 200A or section 206CB of the Act, as the case may be,” the CBDT said.

Who all are required to link Aadhaar and PAN

As per the Section 139AA of the Income Tax Act, every individual who has been allotted a permanent account number (PAN) as of July 1, 2017, and who is eligible to obtain an Aadhaar number, shall intimate his Aadhaar number in the prescribed form and manner. Your PAN will become inoperative if you do not link it with your Aadhaar till 30th June 2023. However, people who fall under the exempted category will not be subject to the effects of PAN becoming inoperative.

Steps to link Aadhaar and PAN

1. Go to the Income Tax e-filing portal. Click on the ‘Link Aadhaar Status’ under the quick links on the homepage.

2. Enter the details of PAN and Aadhaar numbers and click ‘View Link Aadhaar Status’.

3. If your PAN & Aadhaar are not linked, you will see a pop-up message, which will ask you to link them.

4. Enter details such as PAN Number, Aadhaar number, your name on Aadhaar, and your mobile number. 

5. Select the square if only the birth year is mentioned in the Aadhaar card, and also tick the box where you agree to get your Aadhaar details validated. Click on ‘Link Aadhaar’.

6. Enter the Captcha code. The OTP will be sent to the registered mobile number and click the validate button.

7. One should note that Aadhaar and PAN can only be linked after paying a Rs 1,000 fine.

According to official data, as many as 11.48 crore PANs had not been linked to Aadhaar as on January 29, 2024. In a written reply to the Lok Sabha, Minister of State for Finance Pankaj Chaudhary had said that the government had collected Rs 601.97 crore from July 1, 2023 to January 31,2024 as penalty for late linking of PAN and Aadhaar.