Importance of Linking PAN and Aadhar Number

LINKING OF PAN AND AADHAR NUMBER

What is PAN?

PAN stands for Permanent Account Number. It is a unique 10-digit alphanumeric identification number issued by the Income Tax Department of India to individuals and entities for the purpose of tracking financial transactions. PAN is mandatory for certain financial transactions, such as opening a bank account, filing income tax returns, and making certain types of financial transactions. It serves as proof of identity for Indian citizens.

 

What is Aaadhar Number?

Aadhaar is a 12-digit unique identification number issued by the Unique Identification Authority of India (UIDAI) to every individual resident of India. It serves as proof of identity and address, regardless of the person’s age, gender, religion, or economic status.

The Aadhaar number is linked to the individual’s biometric and demographic data, including fingerprints and iris scans, as well as demographic information such as name, address, date of birth, and gender. The Aadhaar number is used for various services and benefits, such as opening a bank account, obtaining a SIM card, receiving government subsidies, and filing taxes.

 

LINKING OF PAN AND AADHAR NUMBER:

 

As per CBDT circular F. No. 370142/14/22-TPL dated 30th March 2022, every person who has been allotted a PAN as on 1st July 2017 and is eligible to obtain an Aadhaar number is required to link PAN with Aadhaar on or before 31st March 2022.

Linking of PAN (Permanent Account Number) and Aadhaar is a process where an individual’s PAN is linked to their Aadhaar number. This linking is mandatory as per the Indian government’s rule, it is done to ensure that the individual’s PAN and Aadhaar are linked to their biometric and demographic data so that their identity can be verified easily. The linking of PAN and Aadhaar can be done in various ways, such as:

  • Online: Through the Income Tax Department’s e-filing website
  • SMS: By sending an SMS to a designated number
  • Offline: By visiting a PAN center or a Permanent Enrolment Centre

Once the PAN and Aadhaar are linked, the individual’s biometric and demographic data is verified to ensure that the PAN belongs to the Aadhaar holder. This linking helps the government to curb the use of multiple PANs by a single individual, which is used for tax evasion and other financial frauds.

IMPORTANCE OF PAN AND AADHAR LINKING:

Linking of PAN and Aadhaar is important for the following reasons:

  1. Tax Compliance: It helps to improve tax compliance by preventing tax evasion through the use of multiple PANs.
  2. Anti-fraud measures: By linking PAN and Aadhaar, the government can ensure that the PAN belongs to the Aadhaar holder and is not being used fraudulently.
  3. Improved service delivery: By linking PAN and Aadhaar, individuals can access various government services more easily. For example, they can use their Aadhaar number to file taxes online, instead of having to provide physical documents.
  4. Financial Inclusion: By linking PAN and Aadhaar, people can open bank accounts, apply for credit cards and loans, and access other financial services more easily.
  5. Easy verification: By linking PAN and Aadhaar, it is easy for government agencies to verify an individual’s identity, which helps to prevent fraud and ensure that benefits and services are delivered to the right person.

In summary, the Linking of PAN and Aadhaar helps in better tax compliance, anti-fraud measures, improved service delivery, financial inclusion, and easy verification of an individual’s identity.

 

PROCESS OF LINKING PAN AND AADHAR NUMBER:

There are several ways to link PAN and Aadhaar number:

  1. Online: One can link PAN and Aadhaar numbers online through the Income Tax Department’s e-filing website. The process involves entering the PAN, Aadhaar number, and name as mentioned on the Aadhaar card. After submitting the details, an OTP (One Time Password) is sent to the registered mobile number on the Aadhaar card. Once the OTP is entered, the linking is done.
  2. SMS: One can also link PAN and Aadhaar numbers by sending an SMS to a designated number. The format for the SMS is UIDPAN<SPACE><12-digit Aadhaar number><SPACE><10-digit PAN number>.
  3. Offline: One can also link PAN and Aadhaar numbers offline by visiting a PAN center or a Permanent Enrolment Centre (PEC). At the center, the individual has to provide their PAN and Aadhaar number, along with a photocopy of their Aadhaar card. The linking is done after the details are verified.

It’s important to note that for the linking process, the name on the PAN card and the Aadhaar card should match, and if there is any discrepancy, it should be corrected before attempting to link the two documents.

Once the PAN and Aadhaar are linked, the individual will receive a confirmation message on their registered mobile number. The linking process is complete and the individual can use their Aadhaar number for various services and benefits that require PAN.

CONSEQUENCES OF NOT LINKING PAN AND AADHAR NUMBERS:

 

If an individual does not link their PAN and Aadhaar number, there can be several consequences:

  1. Non-compliance with tax laws: As per the Indian Government rule, it is mandatory for individuals to link their PAN and Aadhaar numbers. Failure to do so may result in non-compliance with tax laws and attract penalties or fines.
  2. Inability to file taxes: An individual will not be able to file their taxes online if their PAN and Aadhaar numbers are not linked.
  3. Inability to conduct certain financial transactions: Some financial transactions such as opening a bank account, buying or selling property, or making certain investments, etc. require the linking of PAN and Aadhaar numbers. If an individual does not link the two, they may not be able to conduct these transactions.
  4. Difficulty in availing government benefits: An individual may face difficulty in availing of certain government benefits and subsidies if their PAN and Aadhaar numbers are not linked.
  5. Difficulty in obtaining a new PAN Card: If an individual does not link their PAN and Aadhaar number, they may not be able to obtain a new PAN card in case the existing one is lost or stolen.

In order to mitigate the inconvenience to taxpayers, an additional window of opportunity has been provided by the Income tax department to link your PAN with your Aadhaar by 31 Mar 2023.

However, Taxpayers who failed to do so are liable to pay a fee of Rs. 500/- till 30th June, 2022, and thereafter a fee of Rs. 1000/- will be applicable before submission of the PAN-AADHAAR linkage request. 

 

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