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PAN and Aadhaar Card Link
In recent years, the Indian government has emphasized the importance of linking PAN (Permanent Account Number) cards with Aadhaar cards. This
initiative aims to streamline financial processes, reduce tax evasion, and create a more transparent system of identification and financial tracking.
What is Permanent Account Number (PAN)?
PAN is a ten-character alphanumeric code issued by the Income Tax Department to individuals, firms, and entities.
- Purpose: To track financial transactions, ensure tax compliance, and prevent tax evasion.
- Scope of Use:
- Filing income tax returns (ITR).
- Transactions exceeding specified financial limits (e.g., property purchase, fixed deposits).
- Opening a bank account, applying for credit cards, or conducting high-value transactions.
- Serving as proof of identity for various non-tax-related applications.
What is Aadhaar?
Aadhaar is a 12-digit unique identification number issued by the Unique Identification Authority of India (UIDAI) to residents of India.
- Purpose: To provide a unique identity and serve as proof of residence, identity, and address.
- Scope of Use:
- Availing subsidies and welfare schemes.
- KYC verification for bank accounts and telecom services.
- Serving as identity proof in both government and private sectors.
Who Needs to Link Aadhaar and PAN?
There are certain mandatory requirements to link an Aadhaar Card with a PAN Card. Check further details below:
Mandatory Requirement for PAN-Aadhaar Linking
As per Section 139AA of the Income Tax Act, it is mandatory for individuals who meet the following criteria to link their PAN (Permanent Account Number) with Aadhaar:
- Allotted PAN on or before July 1, 2017: Individuals holding a PAN card as of this date must comply with the linking requirement.
- Eligible to Obtain an Aadhaar Number: Individuals who qualify as residents of India and meet the eligibility for Aadhaar enrollment must ensure their PAN is linked to their Aadhaar.
Implications of Non-Compliance
If an individual fails to link PAN with Aadhaar by the deadline (e.g., June 30, 2023), their PAN will become inoperative. This means:
- They will be unable to use their PAN for income tax filing or any financial transactions requiring PAN.
- Non-compliance may also attract penalties under the Income Tax Act.
Exemptions from Linking
Certain individuals are exempt from linking their PAN and Aadhaar, as detailed in the next section.
For Whom is Aadhaar-PAN Linking Not Compulsory?
There are certain categories that are exempted from linking Aadhaar with PAN cards. Means they are not necessarily required to link their Aadhaar Card with their PAN Card. Those exemption criteria are:
Categories Exempted from Aadhaar-PAN Linking
The requirement to link Aadhaar and PAN does not apply to individuals who fall under the following categories:
Residents of Specified States:
- Individuals residing in Assam, Jammu & Kashmir, and Meghalaya are exempt from the Aadhaar-PAN linking mandate.
- This exemption recognizes the challenges of Aadhaar enrollment in these states due to infrastructure and geographical constraints.
Non-Residents (NRIs):
- Non-residents as defined under the Income Tax Act, 1961 are not required to link PAN with Aadhaar.
- NRIs typically hold PAN for financial purposes in India but are not eligible for Aadhaar enrollment due to their non-resident status.
Senior Citizens Aged 80 or Above:
- Individuals aged 80 years or above at any time during the financial year are exempt.
- This exemption acknowledges the limited necessity of Aadhaar linking for senior citizens in this age group.
Non-Citizens of India:
- Foreign nationals who hold PAN for specific purposes, such as business activities in India, are not required to link Aadhaar.
| Category | Reason for Exemption | Voluntary Linking Allowed? |
|---|---|---|
| Residents of Assam, J&K, Meghalaya | Difficulty in Aadhaar enrollment in these states due to geographical and infrastructure constraints. | Yes |
| Non-Residents (NRIs) | Aadhaar enrollment is restricted to residents of India. | Yes |
| Individuals aged 80+ | Limited necessity and use for Aadhaar-PAN linkage. | Yes |
| Non-Citizens of India | Aadhaar is only applicable to Indian residents. | Yes |
Additional Considerations for PAN Aadhaar Linking
There are certain additional considerations as well:
Voluntary Linking for Exempted Individuals
While Aadhaar-PAN linkage is not mandatory for exempted individuals, they may voluntarily choose to link the two documents. However, they must pay the specified fee for the linking process.
Government Notifications and Updates
The exemptions mentioned above are subject to changes or updates issued by the government. For instance:
- Notifications like Department of Revenue Notification No. 37/2017 (dated May 11, 2017) outline the categories and conditions for exemptions.
- Individuals are advised to stay updated with the latest government directives to ensure compliance.
How to Link Pan Card with Aadhaar Online?
The PAN Card and Aadhaar Card linking can be done online through the official website of Income Tax which is incometax.gov.in. To link PAN and Aadhaar, follow the steps provided below:
- Visit the official Income Tax website www.incometax.gov.in.
- On the homepage, locate the “Quick link” section, and under it, locate and click on the “Link Aadhaar” option.
- Now, enter your 10-digit alphanumeric PAN Card number.
- Then, enter the 12-digit Aadhaar Number and click on the “Validate” button.
- If your Aadhaar is already linked to your PAN Card, it will show a popup window saying “Your PAN is already linked to given Aadhaar“.
- If your PAN is not linked to Aadhaar, it will show another Popup saying “PAN not linked with Aadhaar. Please click on Link Aadhaar link to link your Aadhaar with PAN.”
- Click on the “Link Aadhaar” option within this pop-up.
- Now, another popup window will open. Here, click on “Continue to Pay Through E-Pay Tax” when prompted.
- You’ll be redirected to a payment page.Â
- Here, provide your PAN (twice for confirmation) and registered mobile number.
- Then, click on “Continue” to proceed.
- An OTP (One-Time Password) will be then sent to your registered mobile number.
- Enter this OTP in the “Mobile OTP” area and click on “Continue“.
- Review your PAN and name as displayed. If correct, click “Continue“.
- Now a payment page will open. Here, select “Income Tax” as the payment option and click on Proceed button.
- Now, to complete the payment you have to enter your assessment year, type of payment, and sub-type of payment (as shown in the picture below).
- After that click on the Next option.
- Now, choose your preferred payment method and complete the transaction.
- After successful payment, you can download your receipt PDF. Download and save this for your records.
- Click on the “Link Aadhaar” option that appears post-payment.
- Verify that your payment details are correctly reflected.
- On the next page, you’ll see your PAN and Aadhaar numbers pre-filled.
- Enter your name exactly as it appears on your Aadhaar card and your mobile number.
- Check both declaration boxes and click “Link Aadhaar“.
- Enter the OTP sent to your registered mobile number.
- Click “Validate” to complete the process.
- A success message will appear, confirming that your Aadhaar and PAN are now linked.
How to Check Your Aadhaar-PAN Link Status?
You can check the Aadhaar-PAN link status through three main methods:
- Method 1: Through Income Tax Portal (No Login Required)
- Method 2: Through Income Tax Portal (Login Required)
- Method 3: Through SMS
Method 1: Check PAN Aadhaar Link Status Through Income Tax Portal (No Login Required)
This method to check PAN Card and Aadhaar linking allows you to quickly check the status without needing to login to the Income Tax portal:
- Open your web browser and visit www.incometax.gov.in.
- Locate the “Quick Links” section on the homepage.
- Click on “Link Aadhaar Status“.
- Enter your PAN and Aadhaar numbers on the new page.
- Click “View Link Aadhaar Status” to check the status.
Status Messages:
- “Your Aadhaar-PAN linking is in progress“ – The linking process has begun but is not yet complete.
- “Your Aadhaar is successfully linked to your PAN“ – The documents are successfully linked.
Method 2: Check PAN Aadhaar Link Status Through Income Tax Portal (Login Required)
To check your Aadhaar-PAN link status by logging into the portal, follow the steps provided below:
- Access the Income Tax e-filing portal.
- Enter your login credentials (User ID and Password) and proceed.
- On the homepage, locate the “Link Aadhaar Status” option:
- Find it under the Dashboard, or
- Navigate to “My Profile”.
Once validated, the status will display:
Status Messages:
- Linked: Your Aadhaar number will be visible if it is connected to your PAN.
- Not Linked: The message will prompt you to link the documents.
- Pending: If your request is awaiting UIDAI validation, you’ll need to recheck later.
User IDs for Logging in:
- PAN Users:
- Individuals: Includes salaried employees, senior citizens, freelancers, and NRIs.
- Non-individual entities: Companies, trusts, AOPs, HUFs, and others.
- Non-PAN Users:
- Chartered Accountants (CAs): IDs begin with ARCA followed by six digits.
- Tax Deductors: Use their TAN as the User ID.
- Reporting Entities: Use ITDREIN, followed by specific identifiers.
Method 3: Check PAN Aadhaar Link Status Through SMS
If you don’t have access to a computer, you can check PAN Card and Aadhaar Link status via SMS as well:
- Open the messaging app on your phone.
- Compose a new SMS in the following format:
UIDPAN <12-digit Aadhaar> <10-character PAN> - Send the SMS to 567678 or 56161.
For example:
If your Aadhaar number is 123456789012 and PAN is ABCDE1234F, type:
UIDPAN 123456789012 ABCDE1234F
You’ll receive a reply indicating whether the Aadhaar and PAN are linked.
Why Linking PAN with Aadhaar is Important
The integration of Aadhaar and PAN serves multiple purposes, both for individuals and the government. Here’s an in-depth look at the key motivations:
1. Strengthening Tax Compliance
Linking PAN and Aadhaar enables the Income Tax Department to track financial transactions more effectively, ensuring that individuals and entities comply with tax laws.
2. Eliminating Duplicate PAN Cards
Previously, cases of individuals possessing multiple PAN cards were reported. This was often used for fraudulent activities like tax evasion. Aadhaar’s unique biometric verification ensures that each person has only one PAN card linked to their Aadhaar.
3. Facilitating E-filing of Tax Returns
When PAN is linked to Aadhaar, personal details such as name, date of birth, and address are automatically populated in the ITR forms, simplifying the tax filing process.
4. Access to Subsidies and Government Schemes
The government uses Aadhaar to identify beneficiaries for various subsidies and welfare schemes. Linking PAN with Aadhaar ensures that individuals availing benefits are genuine and meet eligibility criteria.
5. Preventing Tax Refund Delays
Tax refunds are directly credited to the bank accounts linked with Aadhaar. The PAN-Aadhaar link ensures seamless communication between the tax department and financial institutions, avoiding refund delays.
Legal Implications of Not Linking PAN with Aadhaar
As per Section 139AA of the Income Tax Act, linking PAN with Aadhaar is mandatory. Failure to do so may lead to the following consequences:
1. Inoperative PAN Card
If PAN is not linked with Aadhaar by the stipulated deadline, it may become inoperative. This means:
- You cannot file ITRs.
- You cannot conduct financial transactions requiring PAN.
- Tax refunds may be withheld.
2. Penalties Under Section 234H
A penalty of up to ₹1,000 may be levied for failing to link PAN with Aadhaar within the prescribed time.
3. Disruption in Financial Activities
From opening bank accounts to investing in mutual funds, PAN is a critical document. An inoperative PAN can severely impact your financial activities.
Government’s Vision: A Unified Database
The PAN-Aadhaar linking initiative is part of a larger vision to create a unified database for efficient governance. By integrating PAN and Aadhaar, the government aims to:
- Enhance Transparency: A unified database helps track financial irregularities and reduces the scope of corruption.
- Streamline Subsidy Distribution: Ensures that subsidies reach the rightful beneficiaries without leakages.
- Improve Ease of Doing Business: Simplified procedures for tax compliance and verification encourage a better business environment.
The Impact of Aadhaar-PAN Linking on Different Sectors
1. Taxation System
- Enhances accountability among taxpayers.
- Reduces manual errors during tax return filings.
- Improves the efficiency of tax collection and refund systems.
2. Financial Institutions
- Simplifies KYC processes for banks and NBFCs.
- Reduces the risk of fraudulent activities and identity theft.
3. Government Welfare Distribution
- Aadhaar integration ensures direct transfer of subsidies to eligible beneficiaries, minimizing misuse.
4. Businesses and Investments
- Simplifies compliance for businesses filing taxes.
- Encourages transparency in high-value transactions.
Linking PAN with Aadhaar is a critical step towards building a transparent and efficient financial system in India. It not only simplifies tax compliance but also ensures equitable access to government subsidies and welfare schemes. While challenges like data privacy and accessibility remain, the benefits far outweigh the drawbacks.
By linking PAN with Aadhaar, you are contributing to a more accountable and transparent governance framework. If you haven’t completed the process yet, now is the time to act and secure your financial future.