Recently, the government made Linking Aadhaar with PAN (Permanent Account Number) mandatory. It was the result of latest changes made to the Income Tax Act. Section 139AA was introduced in the IT Act by way of an amendment to Finance Bill, 2017.
The government aims to expand the usage of the 12-digit Aadhaar number. In addition to this, it wants to curb the malpractices associated with PAN Card. Before the introduction of Sec 139AA, tax offenders have been using PAN card to indulge in rampant tax evasion.
Tax evaders would obtain PAN cards by fraudulent means. They would hold multiple PAN cards in their name. These multiple PAN cards would then be used to fragment or conceal their actual income.
Offenders have used multiple PAN cards to take loans from several banks simultaneously. The banks would be unaware of this anomaly. These would consider the individual as a genuine borrower and extend the loan. Later, the borrower would default in repayment due to credit exceeding his repayment capacity.
Now, with linking Aadhaar with PAN, the tax evaders won’t be able to continue these malpractices anymore. Owing to the involvement of biometric details, Aadhaar number cannot be duplicated; so linking Aadhaar with PAN would make PAN a fool-proof identity.
This move will ensure a higher level of transparency in the filing of ITR (Income Tax Returns). The Income Tax department will have a record of all the financial transactions conducted under linked PAN card. It will become easier to trace money launderers.
Government’s take on the issue
The government issued the following notification about linking Aadhaar with PAN:
1. Starting from 1 July 2017, every individual needs to quote Aadhaar number on the ITR.
The same needs to be done while applying for PAN.
Those who don’t possess Aadhaar number at present but are eligible to obtain Aadhaar number shall quote their Aadhaar Enrolment ID for the above purpose.
2. Every individual who has been allotted permanent account number as on the 1 July 2017, and who has Aadhaar number needs to intimate his Aadhaar number to income tax authorities. It will be done by linking PAN with Aadhaar. This rule is applicable even to those persons who are eligible to obtain the Aadhaar number.
3. However, if an individual does not comply with the above regulations, he will be given partial relief by the court. The relief is available only when the person does not have an Aadhaar number at present. In such cases, his PAN will not be cancelled. Moreover, he will not face implications under the Income Tax Act that one might face for not quoting PAN in transactions.
Steps to Link Aadhaar with PAN Online
1. Visit www.incometaxindiaefiling.gov.in
2. Login to your income tax account using loginID, password and date of birth.
3. Once you login to your account, click on the blinking text “Link Aadhaar”. It will be found on the left pane.
4. In the pop-up window, you need to enter PAN, Aadhaar Number and Name as per Aadhaar. Once it’s done, click “Link Aadhaar”.
While entering details in the pop-up window, you need to ensure that these match the ones appearing on your Aadhaar card.
If everything’s a match, your Aadhaar will be linked to PAN instantly.
5. It might happen that your date of birth and gender fully match with those on Aadhaar except your name. In such a situation, you need to provide with Aadhaar OTP (One Time Password) to proceed further.
Steps to Link Aadhaar with PAN via SMS
You can link Aadhaar with PAN by sending SMS from your mobile phone. You need to perform the following steps:
1. Type UIDPAN<12 digit Aadhaar><10 digit PAN>
The message would look like this: UIDPAN 3421342112341234 AAAAAE12EE
2. Send an SMS to 567678 or 56161
The Income Tax department issued advertisements in newspapers across the country. It explained how Aadhaar and PAN numbers of a person could be linked via sending an SMS to either 56161 or 567678.
Implications of not linking Aadhaar with PAN
PAN is necessary for filing Income Tax returns in India. Individuals and entities who are liable to pay tax on their income need to have PAN card.
Nowadays, apart from filing ITR, you need to quote PAN in the following transactions:
1. Purchase/Sale of immovable property which is worth more than Rs 10 Lakh
2. Mobile wallet transactions which exceed Rs 50,000
3.Opening a bank account except in the case of Jan Dhan Account.
4. Payment of hotel/restaurant bills exceeding Rs 50,000
5. Cash deposit exceeding Rs 50,000 in bank in single day
6. Purchase of foreign exchange or cash payment exceeding Rs 50,000 about foreign travel.
7. Investments are exceeding Rs 50,000 in mutual funds/debentures/RBI Bonds/life insurance policy.
8. Opening a DEMAT account.
9. Business or Profession wherein total sales, turnover or gross receipts exceed or are likely to exceed Rs 5 Lakh.
10. Online registration under National Pension System (except Aadhaar)
11. Purchase/Sale of motor vehicles other than two-wheelers.
You might have to face several difficulties in case you don’t link Aadhaar with PAN.
At the very outset, you won’t be able to file Income Tax Return (ITR) after 1 July 2017. Secondly, your PAN may be rendered invalid; barring you from entering all the PAN-based transactions in future.
Present Scenario
More than 2 crore tax payers have already linked their Aadhaar with PAN. However, the numbers are not that much encouraging when compared to the actual subscribers.
The total number of individuals who were issued an Aadhaar number was 111 crore. The total number of assessees who have been issued a PAN card is more than 25 crore.
Going by the statistics of the Income Tax department, currently, there are only 6 crore individuals in India who file their income tax returns correctly.
Final Words
Bringing about transparency in ITR filing has always been the objective of the government. Linking Aadhaar with PAN happens to be an aggressive step in this direction. To avoid inconveniences in future, ensure that you get it done in time.
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