In India, linking Aadhaar and PAN is mandatory for all taxpayers. PAN /e-PAN is required for all significant financial transactions. Aadhaar serves as proof of identity and proof of address. It also captures biometric information of individuals. Both these documents are a ‘must have’ for all Indians and linking them is a very critical step. Linking Aadhaar and PAN provides an audit trail of transactions to the Income Tax department. Tracking transactions becomes easier. It makes income tax return filing process easy, as returns can be signed using Aadhaar e-verification. Linking Aadhaar and PAN prevents cancellation of PAN.
Exemption from linking Aadhaar and PAN
The following individuals are exempt from linking Aadhaar and PAN
- Residing in the States of Assam, Jammu and Kashmir, and Meghalaya;
- a non-resident as per the Income-tax Act, 1961;
- of the age of eighty years or more at any time during the previous year; or
- not a citizen of India.
Steps to link Aadhaar and PAN
- Open the Income Tax e-filing portal – https://incometaxindiaefiling.gov.in/
- Register on it (if not already done). Your PAN (Permanent Account Number) will be your user id.
- Log in by entering the User ID, password and date of birth.
- A pop up window will appear, prompting you to link your PAN with Aadhaar. If not, go to ‘Profile Settings’ on Menu bar and click on ‘Link Aadhaar’.
- Details such as name date of birth and gender will already be mentioned as per the PAN details.
- Verify the PAN details on screen with the ones mentioned on your Aadhaar. If there is a mismatch, you need to get the same corrected in either of the documents.
- If the details match, enter your Aadhaar number and click on the “link now” button.
- A pop-up message will inform you that your Aadhaar has been successfully linked to your PAN
- You can also visit https://www.utiitsl.com/ OR https://www.egov-nsdl.co.in/ to link your PAN and Aadhaar.
Consequences of not linking Aadhaar and PAN
- PAN becomes inoperative when it is not linked to Aadhaar
- Taxpayers cannot file Income tax return with inoperative PAN cards.
- The pending returns will not be processed and pending refunds will not be issued to inoperative PAN cards.
- The TCS/TDS will be applicable at a higher rate.
- The TCS/TDS credit will not appear in Form 26AS, and TCS/TDS certificates will not be available.
- Taxpayers will be unable to submit 15G/15H declarations for nil TDS.
As PAN is inoperative, the individual cannot do any of the below listed transactions
- Opening bank accounts
- Getting a debit card / credit card
- Opening demat accounts and trading in equity
- Investing in mutual funds and redemption of investments
- Bank transactions exceeding Rs 10,000
- Sale or purchase of goods or services by any person more than Rs.2,00,000 per transaction
So you can see, linking both these documents is very critical. Failure to do so can completely halt all your financial transactions and dealings. Ideally you should link PAN and Aadhaar as soon as both these numbers are allotted to you.