CBDT vide Circular No. 3/2023 dated 28.03.2023 has clarified the consequences of failure to link PAN with the Aadhaar in accordance with the new substituted Rule 114AAA notified by Notification No. 15/2023 dated 28.03.2023 shall take effect from 1st July 2023 and shall remain in force till the PAN becomes operative.
Fees of Rs. 1,000 shall still be payable for linking PAN with Aadhaar.
Section 139AA of the Income-tax Act, 1961 (‘Act’) provides for linking of PAN with Aadhaar by a notified date which was specified as 31st March 2022 as per Notification No. 113/2021 dated 17.09.2021 and now extended to 30th June 2023.
It is also provided that in case of failure to intimate the Aadhaar number, the PAN allotted to the person shall be made inoperative after the date so notified in such manner as may be prescribed.
In this regard, CBDT has prescribed Rule 114AAA to prescribe the manner of making permanent account number (PAN) inoperative.
Vide Circular No. 3/2023 dated 28.03.2023 the Board has issued clarification with respect to substituted provisions of Rule 114AAA.
In case of failure to intimate the Aadhaar Number by the last extended notified date i.e. 30.06.2023, the PAN allotted to the person shall be made inoperative from 01.07.2023 in accordance with the provisions of the Act.
Further, the Finance Act, 2021 inserted a new section 234H in the Act to provide for payment of late fees if the PAN is linked with Aadhaar from 01.04.2022.
This section provides that where a person who is required to intimate his Aadhaar under subsection (2) of section 139AA fails to do so on or before a notified date, he shall be liable to pay a fee not exceeding a sum of one thousand rupees, as may be prescribed, at the time of making intimation under sub-section (2) of section 139AA after the said date.
As per this circular, the following consequences as substituted in Rule 114AAA shall become applicable from 01.07.2023 -
(i) refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made to him;
(ii) interest shall not be payable to him on such refund for the period, beginning with the date specified under sub-rule (4) of rule 114AAA and ending with the date on which it becomes operative;
(iii) where tax is deductible under Chapter XVJJ-B in case of such person, such tax shall be deducted at higher rate, in accordance with the provisions of section 206AA;
(iv) where tax is collectible at source under Chapter XVJJ-BB in case of such person, such tax shall be collected at a higher rate, in accordance with the provisions of section 206CC.
Earlier, vide Circular No. 7/2022, CBDT lists out the following consequences if a PAN becomes inoperative-
(i) The person shall not be able to file a return using the inoperative PAN
(ii) Pending returns will not be processed
(iii) Pending refunds cannot be issued to inoperative PANs
(iv) Pending proceedings as in the case of defective returns cannot be completed once the PAN is inoperative
(v) Tax will be required to be deducted at a higher rate as PAN becomes inoperative
In addition to the above, the taxpayer might face difficulty at various other fora like banks and other financial portals, as PAN is one of the important KYC criteria for all kinds of financial transactions, the Circular states.
Those who have been given exemption from notifying their Aadhaar number under the terms of sub-section (3) of section 139AA of the Act are not subject to the above consequences of PAN becoming inoperative. The following persons are given exemption from linking PAN with Aadhaar-
● Individuals residing in the states of Assam, Meghalaya or Jammu and Kashmir
● A non-resident person
● Individuals aged more than 80 years
● Persons who are not citizens of India
This Circular is issued in supersession of Circular No. 7/2022 dated 30.03.2022.
Read the full text of the CBDT Circular No. 03/2023 dated 28.03.2023 on Consequences of Inoperative PAN from July 2023
Circular No. 03 of 2023
F. No. 370142/14/2022-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
*****
New Delhi, Dated the 28th of March, 2023
Sub.: Consequences of PAN becoming inoperative as per the newly substituted rule 114AAA - reg.
Consequent to the notification substituting rule 114AAA of the Income-tax Rules, 1962 (the Rules) vide notification no. 15 of 2023 dated 28th March, 2023, it is hereby clarified that a person who has failed to intimate the Aadhaar number in accordance with section 139AA of the Income-tax Act, 1961 (the Act) read with rule 114AAA shall face the following consequences as a result of his PAN becoming inoperative:
(i) refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made to him;
(ii) interest shall not be payable to him on such refund for the period, beginning with the date specified under sub-rule (4) of rule 114AAA and ending with the date on which it becomes operative;
(iii) where tax is deductible under Chapter XVII-B in case of such person, such tax shall be deducted at higher rate, in accordance with the provisions of section 206AA;
(iv) where tax is collectible at source under Chapter XVII-BB in case of such person, such tax shall be collected at higher rate, in accordance with the provisions of section 206CC.
2. These consequences shall take effect from 1st July, 2023 and continue till the PAN becomes operative. A fee of one thousand rupees will continue to apply to make the PAN operative by intimating the Aadhaar number.
3. The consequences of PAN becoming inoperative shall not be applicable to those persons who have been provided exemption from intimating Aadhaar number under the provisions of sub-section (3) of section 139AA of the Act.
4. This is in supersession of the Circular No. 07 of 2022 of CBDT dated 30th March, 2022.
5. Hindi version to follow.
P. Amrutha varshini
Under Secretary (TPL-IV), CBDT
Download CBDT Circular No. 03/2023 dated 28.03.2023 on Consequences of Inoperative PAN from July 2023 in PDF format
0 Comments