Reminder: Link PAN with Aadhaar to Avoid Higher TDS

The Income Tax Department has issued a reminder urging taxpayers to link their Permanent Account Number (PAN) with Aadhaar by May 31, 2024. This step is crucial to avoid higher tax deductions at source (TDS) and to ensure seamless income tax return (ITR) filings, with the deadline for ITR submission set for July 31, 2024.

The reminder, posted on X (formerly Twitter), emphasizes the need to link PAN with Aadhaar to prevent an inoperative PAN, which would result in higher tax deductions under Sections 206AA and 206CC of the Income Tax Act, 1961.

Consequences of Not Linking PAN with Aadhaar:

Failure to link PAN with Aadhaar can significantly impact ITR filings.

Non-compliance could lead to higher TDS rates and potential penalties for deductors/collectors.

According to CBDT Circular No. 6/2024, deductors who deducted TDS at regular rates but needed to apply double rates due to an inoperative PAN received tax notices for short-deduction.

Who Needs to Link Aadhaar and PAN:

Individuals allotted a PAN as of July 1, 2017, and eligible to obtain an Aadhaar number must link both as per Section 139AA of the Income Tax Act.

Failure to do so by June 30, 2023, results in an inoperative PAN, affecting tax-related transactions.

Steps to Link Aadhaar and PAN:

Visit the Income Tax e-filing portal.

Click on ‘Link Aadhaar Status’ under quick links on the homepage.

Enter PAN and Aadhaar details and click ‘View Link Aadhaar Status’.

If not linked, a prompt will appear to link them.

Enter PAN number, Aadhaar number, name on Aadhaar, and mobile number.

If only the birth year is on the Aadhaar card, select the relevant checkbox.

Agree to validate Aadhaar details.

Enter the Captcha code and validate the OTP sent to the registered mobile number.

Note that a Rs 1,000 fine must be paid to link Aadhaar and PAN