How to link PAN with Aadhaar and steps to make payment for linking Aadhaar with PAN?

For Indian nationals, the Permanent Account Number (PAN) card and Aadhaar card are essential documents. PAN cards are issued by the Income Tax (IT) departmenr, whereas Aadhaar cards are issued by the Unique Identification Authority of India (UIDAI). A PAN is a special identifying number given to people and companies for tax purposes. A 12-digit unique identifying number called an Aadhaar is given to each resident. However, the IT department has made linking PAN and Aadhaar cards mandatory.

The Income Tax department had earlier issued a circular stating that it is mandatory for all PAN-holders (except those who fall under the exempt category) to link their PAN with Aadhaar on or before 31st March 2023. Earlier, the department mandated to link PAN with Aadhaar on or before 31st March 2022 but the same was extended till 30th June 2022. However, people who linked their PAN with Aadhaar between 1^st April 2022 to 30^th June 2022 had to pay a fine of Rs.500.

Later, the department extended the last date to link PAN-Aadhaar to 31st March 2023. PAN holders who link PAN and Aadhaar between 1st July 2022 to 31st March 2023 are required to pay a penalty of Rs.1, 000. In case PAN holders do not link PAN with their Aadhaar card PAN card will become inoperative from 01^st April 2023. The IT department has mandated linking PAN with Aadhaar to regulate and curb tax evasion.

There are currently only a few days left for the deadline to link PAN with Aadhaar which is 31^st March 2023. After 31^st March, 2023, the PAN card of taxpayers which did not get linked to their Aadhaar as required will no longer be valid and will become inoperative, and they will be subject to the Act’s penalties under the Income Tax Act.

As per the requirements of the Income-tax Act, 1961, any person who was given a PAN as of July 1, 2017, and who is eligible to get an Aadhaar number, is required to Link the PAN and Aadhaar on or before March 31, 2023. In the event that they fail to do so, their PAN will become inoperative and all the activities (like banking, demat etc) which requiring a PAN will be terminated.

What are the Consequences for not linking PAN with Aadhaar?

The below services will be affected if Aadhaar and PAN cards are not linked:

Once the PAN cards becomes inoperative Taxpayers cannot file ITR.
Once the PAN cards becomes inoperative assesses pending returns will not be processed, and pending refunds will not be issued to inoperative PAN cards.
TCS/TDS will be applicable at a higher rate i.e. @ 30% as PAN is invalid.
TDS credit will not appear in Form 26AS, and TCS/TDS certificates will not be available.
Taxpayer will not be able to submit form 15G/15H declarations for nil TDS.
The taxpayer cannot Open a bank account.
The taxpayer cannot Purchase of mutual funds unit exceeding Rs.50,000.
The taxpayer cannot deposit cash with a bank or post office during a day exceeding Rs.50,000.
The taxpayer cannot purchase a bank draft or pay order in cash exceeding Rs.50,000 in a day.
The taxpayer cannot open 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.
The taxpayer cannot make 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.
The taxpayer cannot Sale or purchase of goods or services by any person more than Rs.2,00,000 per transaction

Steps for Linking PAN with Aadhar and making fees payment for linking Aadhaar:

Below are the steps to Link PAN with Aadhaar:

Step 1: Go to the Income Tax e-filing portal

Step 2: Under the ‘Quick Links’ heading on the left-hand side of the homepage, click on the ‘Link Aadhaar’ option.

Step 3: Enter the ‘PAN’ and ‘Aadhaar Number’ and click the ‘Validate’ button.

Step 4: A pop-up message stating to “Pay the fees through E- pay tax”

Step 5: Enter your Pan and mobile number, click on continue. You will receive OTP on mobile no, enter the OTP and verify it.

Your PAN details will be available in masked format. Check and Click on Continue button

Step 6: Click on “Income Tax” under Type of Payment

Now, select the assessment year as AY 2023-24 and Type of Payment as “Other receipts (500)” and click on “Continue” button.

In the next page, the prefill amount “i.e. Rs. 1,000 will appear, now click on continue button.

Now, select the mode of payment i.e. Net banking, debit card, RTGS/ NEFT etc and click on “Continue” button

Review the amount and Click on Pay now button, a pop up will appear scroll down and select the terms, now click on “Submit to Bank” button and make payment through bank.

Save the challan for future records.

Step 7: Go to Income Tax Efiling portal i.e. https://www.incometax.gov.in/iec/foportal/ . Under the ‘Quick Links’ heading on the left-hand side of the homepage, click on the ‘Link Aadhaar’ option. Enter the ‘PAN’ and ‘Aadhaar Number’ and click the ‘Validate’ button.

A pop-up message stating ‘Your payment details are verified’ will appear when the penalty payment has been verified. Click the ‘Continue’ button to submit the linking request.