CBDT vide Notification No. 15/2023 dated 28.03.2023 in G.S.R.227(E) through Income-tax (Fourth Amendment) Rules, 2023 has notified further consequences if a person fails to link PAN with Aadhaar under section 139AA(2) of the Income-tax Act, 1961 (“Act”).
Previously, the deadline to link PAN with Aadhaar has been extended by three months to June 30, 2023, from the existing time limit of March 31, 2023, by a Press release dated 28.03.2023
Finance Act, 2021 has introduced provisions to levy a fee of Rs. 1,000 under section 234H for failure to link the PAN with Aadhaar. Late fees of Rs. 1,000 as per section 234H is payable if the same is linked on and after 1st April, 2022.
Section 139AA of the Income-tax Act, 1961 (‘Act’) provides for linking of PAN with Aadhaar by a notified date which is 31st March 2022 as per Notification No. 113/2021 dated 17.09.2021.
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.
With this notification, Rule 114AAA is amended to provide that where a PAN becomes inoperative due to failure to link with the Aadhaar, later on, links the same, then in such a case the PAN shall become operative within 30 days from the date of intimation of Aadhaar number. Earlier, there was no waiting period of 30 days prescribed in the rule.
CBDT vide Circular No. 7/2022 dated 30.03.2022 lists out the following consequences if a PAN become inoperative-
(i) The person shall not be able to file 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.
The amended rule lists the following further consequences of failure to link Aadhaar with PAN-
1. No refund of tax will be issued to such PAN holders.
2. No interest on refund of tax shall be payable for the period when the PAN becomes inoperative.
3. TDS/TCS shall be at a higher rate as per the provisions of section 206AA or section 206CC
This is in line with the announcement made by the government on 28.03.2023 vide Press Release dated 28.03.2023.
Read the full text of Notification No. 15/2023 dated 28.03.2023 on notifying further Consequences for failure to Link PAN-Aadhaar under Rule 114AAA
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 28th March, 2023
INCOME-TAX
G.S.R.227(E).—In exercise of the powers conferred by section 139AA read with section 295 of the Incometax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely: ‒
1. Short title and commencement.—(1) These rules may be called the Income-tax (Fourth Amendment) Rules, 2023.
(2) They shall come into force from the 1st day of April, 2023.
2. In the Income-tax Rules, 1962, for rule 114AAA, the following rule shall be substituted, namely: —
“114AAA. Manner 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, 2022, the permanent account number of such person shall become inoperative, and he shall be liable for payment of fee in accordance with sub-rule (5A) of rule 114.
(2) 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, 2022, after payment of fee in accordance with sub-rule (5A) of rule 114, his permanent account number shall become operative within thirty days from the date of intimation of Aadhaar number.
(3) A person, whose permanent account number has become inoperative, shall be liable for further consequences for the period commencing from the date as specified under sub-rule (4) till the date it becomes operative, namely:–
(i) refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made;
(ii) interest shall not be payable on such refund for the period, beginning with the date specified under sub-rule (4) and ending with the date on which it becomes operative;
(iii) where tax is deductible under Chapter XVIIB in case of such person, such tax shall be deducted at higher rate, in accordance with 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 provisions of section 206CC:
(4) The provisions of sub-rule (3) shall have effect from the date specified by the Board.
(5) 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. 15/2023 F. No.370142/14/2022-TPL]
P. AMRUTHA VARSHINI, Under Secy.
Note.-The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii) vide number S.O. 969 (E), dated the 26th March, 1962 and last amended by the Income-tax (Third Amendment) Rules, 2023, vide notification number G.S.R. 118(E) dated 21st February, 2023.
Download Notification No. 15/2023 dated 28.03.2023 on notifying further Consequences for failure to Link PAN-Aadhaar under Rule 114AAA in PDF format
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