As per the newly inserted law, the government will specify the amount of penalty that will be levied on not linking PAN with Aadhaar by the due date, where the penal amount will not exceed Rs 1,000.
If you do not link your PAN with Aadhaar by the deadline of March 31, 2021, then not only will your PAN become inoperative, but you will also be liable to pay a penalty. This is as per a new section (section 234H) inserted into the Income-tax Act, 1961, which was done by the government at the time of passing of the Finance Bill, 2021 on March 23.
As per the newly inserted law, the government will specify the amount of penalty that will be levied on not linking PAN with Aadhaar, where the penal amount will not exceed Rs 1,000.
Currently, the due date of linking PAN and Aadhaar is March 31, 2021. As per current laws, if the PAN is not linked with Aadhaar, then PAN will become inoperative. After the expiry of the due date, individual will not be able to conduct financial transactions where quoting of PAN is mandatory.
Do keep in mind that the Budget proposals will come into effect from April 1, 2021, thus, if the government does not extend the deadline and you do not link PAN with Aadhaar by March 31, 2021, then you are liable to pay penalty to the maximum up to Rs 1,000.
Abhishek Soni, CEO & founder, Tax2win.in says, “The Finance Bill 2021 has introduced a new Section 234H to levy a fee for default in intimating the Aadhaar Number. If a person is required to intimate the Aadhaar Number and fails to do so, he/she shall be liable to pay the fees up to Rs. 1,000 at the time of making such intimation. Therefore, if the taxpayer fails to link PAN and Aadhaar by March 31, 2021, he/she shall be liable to pay the fees, up to Rs 1,000. This fee shall be in addition to the other consequences, like PAN will become inoperative due to non-intimation of Aadhaar, higher rate of TDS will be applicable etc.”
Chartered Accountant Naveen Wadhwa, DGM, Taxmann.com says, “Section 234H provides that where a person, who is required to intimate his Aadhaar Number under Section 139AA (2), fails to do so by the date prescribed in this behalf, i.e., March 31, 2021, he shall be liable for payment of fee equals to a prescribed sum not exceeding Rs 1,000 at the time of intimating Aadhaar after such date. It should be noted that besides levy of fees, the PAN shall become inoperative. In that situation, he shall be liable for all the consequences for not furnishing, intimating or quoting the PAN.”
Saraswathi Kasturirangan, Partner, Deloitte India says, “Non-linking of PAN and Aadhaar would result in the PAN becoming inoperative. From an employer perspective, if the PAN of an employee becomes inoperative, then as per there could be a requirement to withhold tax taxes at the higher rate of 20% or the average estimated tax rate for the financial year. Further, the employer could have a challenge in filing the quarterly tax withholding returns, since the employees PAN becomes in-operative. It is therefore important for employers to ensure that the employees’ PAN are duly linked with the Aadhaar. The Government in the Finance Bill has incorporated a provision for levy of fine of Rs. 1000/- where the intimation of Aadhaar details is made after the prescribed date, which is 31 March 2021. This could mean that the Government does not propose to extend the due date further.”