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What will be the consequences of not linking PAN with Aadhaar?

As per Income-tax Act, 1961, it is mandatory for all PAN holders, who do not fall under the exempt category, to link their PAN with Aadhaar on or before 30th June 2023, or else the PAN will be inoperative from 1st July 2023. 

PAN Aadhar linkage requirement does not apply to any individual who is:

i) Residing in the States of Assam, Jammu and Kashmir, and Meghalaya;

ii) A non-resident as per the Income-tax Act, 1961;

iii) of the age of eighty years or more at any time during the previous year; or

iv) Person who is not a citizen of India.

If you fail to link Aadhaar and PAN within the due date, you may have to face the below-mentioned consequences:

If an individual does not link PAN to Aadhaar within the due date, his/her PAN will become inoperative. Once PAN becomes inoperative, it will not be possible to furnish, intimate, or quote the PAN number anywhere. This may further result in:

  • Taxpayers cannot file ITR or claim ITR 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.
  • The following transactions cannot be done since the PAN card will be inoperative:
    • Open a bank account.
    • Issue of debit/credit cards.
    • Purchase of mutual funds unit exceeding Rs.50,000.
    • Cash deposit with a bank or post office during a day exceeding Rs.50,000.
    • Purchase of a bank draft or pay order in cash exceeding Rs.50,000 in a day.
    • A time deposit with banks, Nidhi, Non-Banking Financial Corporations (NBFCs), etc., exceeding Rs.50,000 or aggregating to more than Rs.2,50,000 during a financial year.
    • Payment for one or more prepaid payment instruments as defined by the Reserve Bank of India (RBI) through bank draft, pay order or banker’s cheque aggregating to more than Rs.50,000 in a financial year.
    • Sale or purchase of goods or services by any person more than Rs.2,00,000 per transaction
Penalty under Section 234H:
  • In case an individual fails to link Aadhaar to PAN by the due date, he/she will be held liable for charges of up to Rs. 1,000 for while requesting for linking of PAN with Aadhaar.
  • A penalty of Rs. 10,000 will be applicable for non-filing of returns of income. 

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Note: This Post was last updated on April 3, 2023

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation i.e. April 3, 2023. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, We assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. We assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL WE SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.

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