You must have gotten an SMS from your bank or mutual fund house or other financial institution about linking Aadhaar and Permanent account number (PAN) as today is the last date to do so.
In case you fail to do so, you will have to pay a penalty of Rs1,000 as per the new rules of the Finance Act, 2021. Besides this, your PAN will become invalid. According to rule 114AAA, in case a person is required to furnish or intimate his PAN, and the PAN is inoperative, it will be deemed that he or she has not furnished PAN.
Under various provisions of the Income Tax Act, if a person doesn’t furnish PAN, or gives an inoperative PAN, he or she may have to a pay a higher TDS (tax deducted at source) or TCS (tax collected at source), and may not be able to file income tax return and may face the consequences of not filing the tax return.
Here are some places where you need to furnish PAN, and in case you don’t link your PAN and Aadhaar, you may not be able to perform these tasks:
To open a bank account, demat account, or applying for a debit or credit card, you are required to furnish your PAN card.
In case you are making a transaction above Rs50,000 and more, you are required to quote PAN. If you are depositing Rs50,000 or Rs5 lakh in aggregate over a financial year, you are required to quote PAN. For buying mutual funds, debenture, etc. for an amount exceeding Rs50,000 you are required to quote PAN.
In case you are purchasing any immovable property worth Rs10 lakh or more, you are required to give your PAN card.
Cash payment of more than Rs50,000 in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time
Payment of more than Rs50,000 in a financial year to pre-paid payment instruments
Payment of more than Rs50,000 in a financial year as life insurance premium
Selling or buying of securities, other than shares for amount exceeding Rs1 lakh per transaction
Sale or purchase of shares of a company not listed in a recognized stock exchange for amount exceeding Rs1 lakh per transaction
Sale or purchase of goods or services of any nature other than those specified above for an amount exceeding Rs2 lakh per transaction
Exceptions to the PAN rule:
In case you do not have PAN, Income Tax department rules allow you to carry out any of the above transactions after signing a declaration in Form 60 which states that you do not hold a PAN card and the income is below taxable limit.
Minors are allowed to quote PAN card number of a parent or guardian only if he or she does not have any taxable income.
NRIs get relaxation in quoting PAN in some cases.
According to rule 114B, the central government, state governments and the consular offices are not required to mention PAN card numbers.
The Aadhaar card rule in lieu of PAN:
The Aadhaar card rule is now another exception but valid only for those who have been allotted a PAN. For example, if the PAN card number is not readily available before you, or you have misplaced it, you can easily quote your Aadhaar card number instead of PAN. The income tax department has allowed all PAN card holders to mention Aadhaar number in lieu of PAN. You can use it not only for filing your income tax returns but also for carrying out the above-specified transactions for which PAN is mandatory. But you must link the PAN card with an Aadhaar card. The deadline for doing so is today.