So what if someone fails to link their Aadhaar and PAN cards on time?
The Central Board of Direct Taxes (CBDT) issued a notification on March 29, 2022, which states that if the PAN-Aadhaar is bound within three months of the deadline (March 31, 2022), a fee of Rs 500 will be charged. This means that an individual is liable to pay a penalty of Rs 500 if he links PAN to the Aadhaar card between April 1, 2022 and June 30, 2022. Otherwise, a penalty of Rs 1,000 will be charged.
It is important to note that the central government has extended the Aadhaar PAN card binding deadline for the past 3 years now, to ensure that the 130 crore Indians complete the process before the deadline. The central government extended the six-month PAN-Aadhaar card binding deadline, from September 30, 2021 to March 31, 2022.
[UPDATE]: The Central Government of India extends the deadline for linking PAN to Aadhaar from March 31, 2021 to June 30, 2021. The Income Tax Department announcement this on his official Twitter account.
[UPADTE]: The deadline for linking Aadhaar with PAN card (permanent account number) ends today, 31 March 2021. If someone does not do so today, the PAN card may become invalid. And one may also be required to pay a penalty of ₹1,000 as per Finance Bill 2021.
If you think your PAN might already be linked to your Aadhaar, you can visit India Income Tax e-filing website to know the status.
The scheme to link every citizen’s Aadhaar card to their PAN card has been on the Indian government’s radar since 2017. The first deadline to link the PAN card to the Aadhaar card was set for September 2019 but has since been extended 4 times. 2 of those 4 expansions happened in 2020 alone. In June, which was the second deadline of the year, due to COVID-19, the government announced that remaining citizens now have until March 31, 2021 to link Aadhaar to the PAN card.
The government has repeatedly made it clear through its tenacity that linking the two maps is inevitable. After the binding period ends, users who do not fulfill this obligation will not be able to perform several functions such as depositing ITR and making large transactions, in addition to being stripped of their financial validity in the eyes of the State.
Now, as if to underscore this goal and its timeliness, the Indian government has released the estimated number of Aadhaar-related PAN cards, along with a graph showing the increase in India’s PAN allocation over the years.
According to the tweet, 50.95 crores of Indians have PAN cards as of August 2020. Of these, 32.71 crores have already linked their PAN cards to Aadhaar.
This number, however, reflects a fairly small portion of the Indian population. With around 130 million people in India, government estimates mean that less than half of the Indian population has a PAN card at this moment. However, an even smaller fragment, about 1/4th of the total population was able to link the two documents.
By the end of last year, 125 million people were said to have obtained an Aadhaar card. Interestingly, another report points out that 95% of them 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 bit difficult to achieve. Although the government has allowed the possibility of linking PAN and Aadhaar online, many people, especially those who do not feel comfortable handling sensitive data-related affairs digitally, might not use this provision. Additionally, those without access to the internet and a smart device or those who cannot read may not be able to link the two documents without help. This is a major loophole, which was not as damaging in the pre-pandemic era.
In addition, the government has introduced new tax reforms and regimes which are deeply linked to whether Aadhaar and NAP 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 have successfully linked their Aadhaar card, PAN card and bank account(s) will have their ITR forms automatically filled in by IT based on their transaction history. This is intended to increase citizens’ tax compliance and make the tax filing process as convenient as possible. Recently, the government’s official Twitter account claimed that the number of cases held up for tax audit has significantly decreased during the last 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 global tax return by recording all of their high volume transactions.
Finally, Prime Minister Modi today announced the ‘Transparent Taxation’ scheme, which aims to ‘honor honest taxpayers’. Program details are still unclear and will be announced on Thursday. The general objectives are supposed to benefit “honest taxpayers” through provisions such as prompt refunds.