In 2019, the Central Board of Direct Taxes issued a notification that said that it is mandatory for everybody to link their Aadhar card with a PAN card. The board took that decision to curb the problem of duplicate PAN’s.
The chairman of CBDT has told that the linking of Aadhar with PAN is expected to expose tax frauds. It will also to be providing hassle-free transfers of benefits that the government provides to eligible individuals. The chairman also said that the linking of Aadhar card with PAN is mandatory to file income tax returns.
If a person has not linked his Aadhar with his PAN card, he might face the following consequences:
Cannot File Income Tax Returns
If the Adhar and PAN card of a person are not linked, then he cannot file for income tax returns, and not filing income tax return within the deadline would lead to penalties of up to Rs. 10,000.
Interest on Tax Amount
If a person fills his ITR after the due date, then he will face interest on the tax amount. The interest rate will be 1 % after the deduction of TDS, TCS, advance tax, and other tax deductions mentioned in the Income Tax law.
No carry forward of losses
If the income tax return is not filed within the due date, then the person cannot carry forward the losses under the head of ‘capital gains’ or ‘profit and gains of business or profession’. However, the person will be able to carry forward the loss under the head ‘income from the house’ and the loss of unabsorbed depreciation.
Penalty
The government has formed a three-tier system for those who do not file income tax returns within the due date. In such cases, a person may be imposed with a penalty ranging from Rs. 5000 to Rs. 10,000. In the case of taxpayers, who earn less than Rs. 5,00,000 a year, shall receive the penalty of Rs. 1000.
Cannot make Certain Bank Transactions
The government also said that the card will become ‘inoperative’ and the cardholder would not be able to conduct those financial transactions where it is mandatory to link the two cards.
If the Aadhar is not linked with the PAN Card, then the person cannot buy/sell a property and make investments. The person may also face higher TDS rates and may be barred from making any financial transactions.
However, the Income Tax Department has said that, once the Aadhar will be linked with the PAN card, they might allow the revival of the ‘inoperative’ account.
May face Legal consequences
Having an ‘inoperative’ PAN is like not having a PAN card. In this case, a person is liable for all the consequences under the Income Tax Act. By the law, a person may face the penalty of Rs 10,000 as per section 272B of the Income Tax Act.
PAN will become Invalid
The Income Tax Department has also said, ‘If a person fails to intimate the Aadhar number, then the PAN allotted to that person will be deemed to be invalid. According to the situation, other provisions of the Act may apply in the issue if the person had not linked his Aadhar to the PAN card.’
Conclusion
Therefore, to save yourself from all the burden of heavy penalty to the trouble of facing any legal consequences, it is advisable to link your Aadhar to your PAN card. To link your PAN card with Aadhar, all you have to do is go to incometaxindiaefiling.gov.in, fill in your PAN card and Aadhar details, confirm the information if it is correct or not, enter the Captcha code, and send the ‘Link Aadhar’ button.
