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CBDT notifies manner of making PAN inoperative for non linking of Aadhaar

cbdt-notifies-manner-of-making-pan-inoperative-for-non-linking-of-aadhaar

If Aadhaar is not linked to PAN by 31st March 2020 then Permanent Account Number (PAN) will become inoperative. CBDT has notified the manner in which PAN will be made inoperative. The last date for PAN-Aadhaar linking is 31st March, 2020.


Section 139AA of the Income Tax Act, 1961 mandates PAN-Aadhaar linking within the prescribed date. It further provides that if PAN-Aadhaar is not linked within the prescribed date, the PAN will become inoperative after the prescribed date.

CBDT vide Notification No. 107/2019 dated 30.12.2019 notified the last date to link PAN-Aadhaar is 31-03-2020. Prior to this, the last notified date for the PAN-Aadhaar linking was 31-12-2019.

Section 139AA further provides that the manner of making the PAN inoperative will be prescribed. Now CBDT has prescribed the manner in which a PAN will be made inoperative if not linked to Aadhaar.

CBDT has issued a Notification No. 11/2020 dated 13-02-2020 which provides that where a person, who has been allotted the permanent account number as on 01.07.2017 and is required to intimate his Aadhaar number under section 139AA(2), has failed to intimate the same on or before the 31st day of March, 2020, the PAN of such person shall become inoperative immediately after 31-03-2020 for the purposes of furnishing, intimating or quoting under the Act.

It further states that where a PAN has become inoperative, then it shall be deemed that he has not furnished, intimated or quoted the PAN as required under the law and he shall be liable for all the penal consequences under the Act for not furnishing, intimating or quoting the permanent account number (PAN).

It is further provided that an inoperative PAN can be reactivated after 31-03-2020 by linking the PAN with his Aadhaar.

Through this notification, the CBDT amended Income Tax Rules, 1962 and inserted Rule 114AAA with heading "manner of making permanent account number inoperative".

It may be noted that the PAN does not become invalid but becomes inoperative if the same is not linked with Aadhaar.

The procedure to link PAN with Aadhaar is very simple. One may visit the e-filing portal of the income tax department and click on 'Link Aadhaar' to link his PAN with his Aadhaar Number.

PAN and Aadhaar linking can also be done by sending an SMS to either 567678 or 56161 in the format UIDPAN<SPACE><12 digit Aadhaar><SPACE><10 digit PAN>.

PAN and Aadhaar linking can also be done manually by filling Annexure-I form and submit to an NSDL or UTIITSL service center. 

Finance (No.2) Act, 2019 prescribed that PAN and Aadhaar is interchangeable. It means if a person does not have a PAN, he can quote his Aadhaar Number wherever PAN is required. Further, in the Budget 2020, the Finance Minister announced that PAN will be issued instantly through Aadhaar Number.

The linking of PAN with Aadhaar was already made mandatory to file the income tax return. No income tax return was allowed to be filed without linking PAN and Aadhaar from July 2017.

Earlier, the constitutional validity of section 139AA was challenged before the Supreme Court and the Supreme Court while upholding the constitutional validity of Aadhaar has also upheld the mandatory linking of PAN with Aadhaar in September 2018.

However, the validity of the Aadhaar Act is itself in question before the larger bench of the Supreme Court. The Hon’ble Supreme Court in case of Rojer Mathew v. South Indian Bank Ltd has referred the issue of ‘whether Aadhaar Act was rightly introduced as a 'Money Bill' for consideration by a Larger Bench.

Considering the question of the constitutional validity of Aadhaar Act, the Gujarat High Court has given relief to the taxpayers and provided that PAN not linked with Aadhar shall not be declared inoperative till the judgment of the Supreme Court in the aforesaid case is delivered and available.

When section 139AA was first introduced in 2017, it provided that if the PAN and Aadhaar is not linked within the notified date it will become invalid. The law was amended in 2019 and it was provided that in case of failure to link PAN with Aadhaar, the PAN will become inoperative. As the term suggests, invalid means that the PAN will be deemed to be non-existent. However, in the case of an inoperative PAN, it would be useless for transactional purposes. Past transactions will remain valid. Now it is provided that any unlinked PAN cannot be used for furnishing and quoting till Aadhaar is linked.

Previously, the deadline for linking of PAN and Aadhar had been extended several times and now the new deadline is March 31, 2020. It is reported that till 27 January 2020, around 31 crore PAN s have been linked with Aadhaar and around 18 crore PAN are yet to be linked with Aadhaar.

Vide Notification No. 37/2017, dated 11.5.2017, CBDT has exempted the following individuals from the linking of PAN with Aadhaar-

1. An individual who is residing in the States of Assam, Jammu and Kashmir and Meghalaya;

2. An individual who is a non-resident as per the Income-tax Act, 1961;

3. An individual who is of the age of eighty years or more at any time during the previous year;

4. An individual who is not a citizen of India.

It appears that the government is in no mood to give further extension and it is advisable to link the PAN with Aadhaar at earliest to avoid any harassment later on.


Read the full text of the Notification No. 11/2020 dated 13-02-2020

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION

New Delhi, the 13th February, 2020

G.S.R. 112(E).—In exercise of the powers conferred by proviso to sub-section (2) of section 139AA read with section 295 of the Income tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend Income-tax Rules, 1962, namely:-

1. Short title and commencement. –
(1) These rules may be called the Income-tax (5th Amendment) Rules, 2020.
(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962, after rule 114AA, the following rule shall be inserted, namely:-

114AAAManner of making permanent account number inoperative. (1) Where a person, who has been allotted the permanent account number as on the 1st day of July, 2017 and is required to intimate his Aadhaar number under sub-section (2) of section 139AA, has failed to intimate the same on or before the 31st day of March, 2020, the permanent account number of such person shall become inoperative immediately after the said date for the purposes of furnishing, intimating or quoting under the Act.

(2) Where a person, whose permanent account number has become inoperative under sub-rule (1), is required to furnish, intimate or quote his permanent account number under the Act, it shall be deemed that he has not furnished, intimated or quoted the permanent account number, as the case may be, in accordance with the provisions of the Act, and he shall be liable for all the consequences under the Act for not furnishing, intimating or quoting the permanent account number.

(3) Where the person referred to in sub-rule (1) has intimated his Aadhaar number under sub-section (2) of section 139AA after the 31st day of March, 2020, his permanent account number shall become operative from the date of intimation of Aadhaar number for the purposes of furnishing, intimating or quoting under the Act and provisions of sub-rule (2) shall not be applicable from such date of intimation.

(4) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall specify the formats and standards along with the procedure for verifying the operational status of permanent account number under sub-rule (1) and sub-rule (2).”.


[Notification No.11/2020/F.No. 370149/166/2019-TPL]
ANKUR GOYAL, Under Secy.

Note : The principal rules were published in the Gazetted of India, Extraordinary, Part-II, Section-3, Sub-section (ii) vide number S.O. 969 (E), dated the 26th March, 1962 and were last amended vide notification number G.S.R. 110(E), dated the 12th February, 2020.


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