Let us discuss on the consequences if you fail to link your Aadhaar with your PAN by the deadline, the following consequences will apply:
1. PAN Becomes Inoperative• Your PAN will be deemed inoperative and cannot be used for financial or tax-related transactions.
• Once inoperative, it will be treated as if you do not have a PAN.
2. Higher Tax Deduction at Source (TDS)• TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) may be deducted at a higher rate as per Section 206AA of the Income Tax Act.
3. Penalties for Non-Compliance
• Non-linking may attract a penalty of up to ₹10,000 under Section 272B of the Income Tax Act for failing to furnish a valid PAN.
4. Issues with Financial Transactions
• PAN is mandatory for many transactions, such as opening a bank account, investing in mutual funds, buying property, and high-value transactions. An inoperative PAN will prevent these activities.
5. Reactivation Requires Linking Aadhaar
• To reactivate your PAN, you will have to link it with Aadhaar and pay a late fee of ₹1,000 under Section 234H of the Income Tax Act.
6. Difficulty in Obtaining Refund
• Failure to link your PAN with Aadhaar will result in the Income Tax Department withholding your refund.
Summary:
Not linking Aadhaar with PAN can disrupt your financial and tax-related activities, increase your TDS rate, and lead to penalties. It’s crucial to complete the linking process to avoid these complications.