PAN-Aadhaar linking: What will happen if PAN is not linked with Aadhaar by September 30?

Highlights

  • Inoperative means that you will not be able to use your PAN to conduct transactions till you link it to Aadhaar.
  • However, officially, the government is yet to define the meaning of inoperative.
  • The government is yet to clarify whether an inoperative PAN can be re-activated after the deadline once it is linked with Aadhaar.
If you do not link your PAN with your Aadhaar by 30 September 2019, then your PAN will become inoperative from October 1. Earlier the rule was that, if your PAN was not linked with your Aadhaar by a specified date, then PAN would have become invalid.

Invalid PAN means that it will be treated like you never had one. On the other hand, inoperative means that you are likely not be able to use your PAN to conduct financial transactions till you link it to Aadhaar. However, officially, the govt is yet to define the meaning of inoperative.

Gopal Bohra, Partner, NA Shah Associates says, "If your PAN is not linked with your Aadhaar, then from October 1 onwards your PAN will become inoperative. The change was announced in the recent Budget to protect the previous transactions done by you using your PAN."


The Budget presented in July, changed the PAN-Aadhaar linking rules. Initially when the law was introduced in 2017, if PAN was not linked with Aadhaar by a notified date, then PAN would have become invalid. The deadline to link PAN with Aadhaar by September 30 was notified by the Central Board of Direct Taxes (CBDT) on March 31, 2019.

However, these rules were amended in July 2019 Budget to protect past transactions done by users. The budget document said, "In order to protect validity of transactions previously carried out through such PAN, it is proposed to amend the said proviso so as to provide that if a person fails to intimate the Aadhaar number, the PAN allotted to such person shall be made inoperative in the prescribed manner."

The new rule regarding linking of PAN with Aadhaar came into effect from September 1.

Also Read: 7 income tax laws that came into effect from September 1

What will happen if PAN is not linked with Aadhaar by September 30?
According to experts, there is no clarity regarding what will happen if PAN is not linked with Aadhaar by the notified date of September 30. The government is yet to clarify whether an inoperative PAN can be re-activated after the deadline once it is linked with Aadhaar.

Bohra says, "There is no clarification from the government about what will happen if the PAN becomes inoperative. It is likely that the consequences will be similar to not holding the PAN and in that event you will not be able to undertake any specified financial transactions where quoting of PAN is mandatory."

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Abhishek Soni, CEO & Founder, Tax2win.in, an ITR filing website says, "As per Income Tax Laws, linking of PAN with Aadhaar is mandatory and it has to be done by September 30, 2019. If the PAN is not linked with the Aadhaar within the said timeline, PAN of the taxpayer will become in-operative. That means the taxpayer will not be able to use the PAN and it will be deemed that he does not hold the PAN."

Chartered Accountant Naveen Wadhwa, DGM, Taxmann.com says, "If taxpayer does not link his PAN with Aadhaar number by September 30, 2019 then the PAN of the taxpayer shall be deemed to be inoperative. Once a PAN becomes inoperative, the taxpayer will not be able to enter into transactions where quoting of PAN is mandatory. The manner in which inoperative PAN shall be made operative against is yet to be notified by the CBDT."

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Will the deadline to link PAN-Aadhaar get extended?
Wadhwa says, "It is unlikely that the deadline of September 30, 2019 for linking PAN-Aadhaar will be further extended by the CBDT. The requirement to link your Aadhaar with PAN was first introduced by the Finance Act, 2017 by inserting a new section 139AA in the Income-tax Act, 1961 wherein linking was made mandatory, w.e.f., 01-07-2017. However, thereafter, the CBDT has extended the deadline for linking PAN-Aadhaar multiple times. Since, there is less likelihood of any further extension, it is suggested that taxpayers should link their PAN with Aadhaar on or before the due date. Linking can be done by three modes, i.e., by sending SMS, by visiting E-filing website or by visiting designated PAN Service centre."

Also Read: How to link PAN with Aadhaar

Also Read: Check if your PAN is linked with Aadhaar
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