So, what happens if someone fails to link their Aadhaar and PAN cards within the deadline?
The Central Board of Direct Taxes (CBDT) issued a notification on March 29, 2022, which says if the PAN-Aadhaar is linked within three months after the deadline (March 31, 2022), a fee of Rs 500 will be charged. That means an individual is liable to pay a penalty of Rs 500 if he/she links PAN with Aadhaar card between April 1, 2022, and June 30, 2022. Else, a penalty of Rs 1,000 will be charged.
It’s important to note that the Central Government has been extending the time limit for Aadhaar PAN card linking for the last 3 years now, to ensure that all 130 crore Indians complete the process by the deadline. The Central Govt has extended the PAN-Aadhaar card linking deadline by six months, from September 30, 2021, to March 31, 2022.
[UPDATE]: Central Government of India extends the time limit for linking PAN with Aadhaar from March 31, 2021, to June 30, 2021. The income tax department announced this on its official Twitter account.
[UPADTE]: The deadline to link Aadhaar with PAN (Permanent Account Number) card ends today, 31 March 2021. If anyone fails to do so today, the PAN card is likely to become invalid. And one may also be liable to pay a penalty of ₹1,000 as per the Finance Bill 2021.
If you think that your PAN might be linked with your Aadhaar already, you can visit the Income Tax India e-Filing website to know the status.
The agenda to link every citizen’s Aadhaar card with their PAN card has been on the Indian Government’s radar ever since 2017. The first deadline for linking PAN card with Aadhaar card was set for September 2019 but has since been extended 4 times. 2 out of these 4 extensions have happened in 2020 alone. Back in June, which was the second deadline of the year, owing to COVID-19, the government announced that remaining citizens now have time up to March 31, 2021 to link the Aadhaar with PAN card.
The government has made it clear time and again, by its tenacity, that linking the two cards is inevitable. After the linking period is over, users who fail to fulfill this compulsion will be unable to perform several functions like filing for ITR and making big transactions, apart from being stripped of their financial validity in the eyes of the state.
Now, as if to highlight this goal and its desirability, the Indian government has disclosed the estimated number of PAN cards linked with Aadhaar, along with a graph showcasing the increase in India’s PAN allotment over the years.
According to the tweet, 50.95 crore Indians have PAN cards as of August 2020. Out of these, 32.71 crores have already linked their PAN cards with Aadhaar.
This number, however, reflects a fairly small portion of the Indian population. With about 130 crore residents in India, the government’s estimations mean that less than half of India’s population has a PAN card at this moment. However, an even smaller fragment, about 1/4th of the total population has been able to link the two documents.
By the end of last year, 125 crore people reportedly obtained an Aadhaar card. Interestingly, another report points out that 95% of those use it once a month.
With the next deadline 8 months away, and India being one of the worst-hit countries by the COVID-19 pandemic, this goal seems a little difficult to realize. While the government has enabled the option to link PAN and Aadhaar online, many people, especially those who don’t feel comfortable handling sensitive data-related affairs digitally, might not utilize this provision. Additionally, those lacking access to the internet and a smart device or those who aren’t literate might be unable to link the two documents without help. This is a major loophole, one that wasn’t as detrimental in the pre-pandemic era.
Furthermore, the government has been rolling out new tax reforms and schemes that are deeply tied into whether the Aadhaar and PAN are linked or not.
Pre-filled ITR forms, Form 26AS, and “Transparent Taxation”
The Income Tax department recently introduced pre-filled ITR forms. With this provision, users who successfully linked their Aadhaar card, PAN card, and bank account(s) will have their ITR forms auto-filled by the IT department based on their transaction history. This is meant to increase tax compliance among citizens, as well as make the tax filing process as convenient as possible. Recently, the government’s official Twitter account claimed that the number of cases picked up for tax scrutiny has significantly decreased over the past few years.
Another significant reform that will directly affect individuals with unlinked cards is the revised Form 26AS which would now be updated electronically and act as a user’s overall tax statement by logging all their high-volume transactions.
Lastly, PM Modi announced the “Transparent Taxation” scheme today, which is an attempt to “honour honest taxpayers.” The details of the scheme are still unclear and will be announced on Thursday. The broad goals are meant to benefit “honest taxpayers” through provisions such as quick refunds.