Owing to the ongoing COVID-19 pandemic in the country, the government has extended the deadline to link the Permanent Account Number (PAN) and the Aadhaar card till June 30, 2021. According to the Central Board of Direct Taxes (CBDT), if the users failed to link the two by the stipulated deadline, their PAN cards may become ‘inoperative’. As a result, individuals will not be able to conduct financial transactions.

The new guidelines have come under the new section (section 234H) of the Income-tax Act 1961 which was recently added when Finance Bill 2021 was passed.Here are the services that will be impacted in case PAN is not linked with Aadhaar:

ITR returns will not be processedUsers should note that while income tax returns can be filed even without linking the two, the department does not process the returns until PAN and Aadhaar are linked.

Defaulters will be levied a penaltyAn individual may be liable to pay a late fee of up to Rs 1,000 in case of non-linking of their PAN with Aadhaar.According to income tax laws, if an individual’s PAN becomes inoperative because of not linking it with Aadhaar, and such person is required to quote the PAN, it will be deemed as he/she has not furnished the PAN. This is then liable for all consequences under the Income Tax Act.

Bank account savings will be impactedThis will also lead to an individual’s KYC being incomplete as a PAN card is one of the necessary documents required for the completion of KYC. This will, in turn, impact one’s bank account savings.Additionally, if the individual earns interest on savings above Rs 10,000, then the tax deducted at source (TDS) rate levied will be 20 percent as TDS levied on a bank account without a PAN card is doubled.

How to link PAN card and Aadhaar?An Aadhaar number can be linked with a Permanent Account Number (PAN) online. People can visit the official e-filing website of the Income Tax (I-T) Department to link the two. The Income Tax Department also provides an SMS-based facility to enable the linking of Aadhaar with PAN.Those who are not comfortable linking the PAN card with Aadhaar online can do it offline as well through PAN services centres of NSDL and UTITSL.