New Delhi: The deadline for linking Aadhaar with PAN (Permanent Account Number) is today, but there are indications that India may extend the deadline once again. As per the Income-tax Act of 1961, it is mandatory for all PAN holders, except those falling under the exempt category, to link their PAN with Aadhaar. Failure to do so by the deadline will render the PAN inoperative from July 1, 2023. While the original deadline without any fine has already passed, taxpayers can still link their Aadhaar and PAN by paying a fine of Rs 1,000 until today.
Experts have suggested that the deadline for Aadhaar-PAN linking is likely to be extended to ensure a broader coverage of the population. Vivek Iyer, Partner and leader of Financial Services Risk at Grant Thornton Bharat, emphasized the importance of providing the right incentives for compliance and behavioral changes. Iyer believes that penalties for delays in linking, such as late fees or additional surcharges, can encourage greater compliance.
The Indian government has previously extended this deadline on multiple occasions. Amit Gupta, Managing Director at SAG Infotech, has recommended aligning the Aadhaar-PAN linking deadline with the income tax return (ITR) filing time. Gupta also highlighted the need for an extension to improve compliance due to factors like lack of awareness, technical difficulties, and logistical challenges.
It's worth noting that the last day to file ITR for the financial year FY2022-23 is July 31, 2023. Recent data from the Central Board of Direct Taxes reveals that out of more than 610 million PAN cards issued, only 480 million have been successfully linked with Aadhaar as of February 2023.
While income tax returns can still be filed without linking Aadhaar and PAN, it's important to understand that the returns will not be processed until the linking is completed. Failure to link the two will result in incomplete KYC (Know Your Customer) information, impacting one's bank account savings. Additionally, if an individual earns interest on savings exceeding Rs 10,000, the tax deducted at source (TDS) rate will be 20 percent, as TDS on a bank account without a PAN card is doubled.
As the deadline approaches, the possibility of an extension offers some respite to individuals who are yet to link their Aadhaar with PAN, ensuring compliance with the Income-tax Act and avoiding any potential penalties.