CBDT has issued an Order dated 30th March, 2022 and specified 1st April 2023 as the date from which the PAN shall become inoperative if the PAN is not linked to Aadhaar. Further, CBDT vide Circular No. 7/2022 dated 30.03.2022 has clarified the consequences of failure to link PAN with Aadhaar and clarifies the specified date for the purpose of Rule 114AAA(2) of the Income-tax Rules, 1962 (‘Rules’).
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.
CBDT vide Notification No. 17/2022 dated 29.03.2022 in G.S.R. 229(E) through Income-tax (Third Amendment) Rules, 2022 amended Rule 114AAA(2) to specify the ‘specified date’ from which this sub-rule will take effect.
In this regard, CBDT vide an Order dated 30.03.2022 specifies the date 1st April 2023 as the specified date from which the PAN shall become inoperative under Rule 114AAA(2).
Vide Circular No. 7/2022 dated 30.03.2022 the Board has issued clarification with respect to relaxation of provisions of Rule 114AAA(2).
In case of failure to intimate the Aadhaar Number by the last extended notified date i.e. 31.03.2022, the PAN allotted to the person shall be made inoperative in accordance with the provisions of the Act.
Further, the Finance Act, 2021 inserted a new section 234H in the Act to complete the process of PAN-Aadhaar linking for identifying bogus PANs.
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.
The Circular 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 tax payer might face difficulty at various other fora like banks and other financial portals, as PAN is one of the important KYC criterion for all kinds of financial transactions, the Circular states.
Hence, in order to have smooth application of section 234H and existing rule 114AAA, it is clarified that the impact of sub-rule (2) of rule 114AAA i.e. 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 shall come into effect from 1 st April, 2023 and the period beginning from 1st April, 2022 and ending with 31st March, 2023, shall be the period during which the said sub-rule shall not have its negative consequences.
However, the person shall be liable to pay a fee in accordance with sub-rule (5A) of rule 114.
Thus, if a person links his PAN with Aadhaar by 31st MArch 2022, he is required to pay any late fees.
If the person fails to link his PAN with Aadhaar by 31st March, his PAN will become inoperative from next year i.e. 1st April 2023. If he intends to link his PAN with Aadhaar after 31st March, 2022, then he has to pay late fees of Rs. 500 or Rs. 1000, as the case may be.
In this context, the Board has released a Press Release on 30th March, 2022 which reads as under-
Under the provisions of the Income-tax Act, 1961 (“the Act”), every person who has been allotted a PAN as on 1st July, 2017 and is eligible to obtain Aadhaar Number, is required to intimate his Aadhaar to the prescribed authority on or before 31st March, 2022. On failure to do so, his PAN shall become inoperative and all procedures in which PAN is required shall be halted. The PAN can be made operative again upon intimation of Aadhaar to the prescribed authority after payment of a prescribed fee. In order to mitigate the inconvenience to the taxpayers, as per Notification No.17/2022 dated 29th March, 2022, a window of opportunity has been provided to the taxpayers upto 31st of March, 2023 to intimate their Aadhaar to the prescribed authority for Aadhaar-PAN linking without facing repercussions. As a result, taxpayers will be required to pay a fee of Rs. 500 up to three months from 1st April, 2022 and a fee of Rs.1000 after that, while intimating their Aadhaar. However, till 31st March, 2023 the PAN of the assessees who have not intimated their Aadhaar, will continue to be functional for the procedures under the Act, like furnishing of return of income, processing of refunds etc. A detailed Circular No.7/2022 dated 30.03.2022 has also been issued in this regard. After 31st March, 2023, the PAN of taxpayers who fail to intimate their Aadhaar, as required, shall become inoperative and all the consequences under the Act for not furnishing, intimating or quoting the PAN shall apply to such taxpayers.
Read the full text of the CBDT Order dated 30.03.2022 on Specified Date for PAN to become Inoperative
F.No.370142/14/2022-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
(TPL Division)
***
New Delhi, dated 30th March, 2022
ORDER
Sub.: Specified date for the purposes of proviso to sub-rule (2) to rule 114AAA of the Income-tax Rules, 1962 - reg.
The Board hereby specifies the 1st day of April, 2023, as the specified date for the purpose of the proviso to sub-rule (2) of rule 114AAA of the Income-tax Rules, 1962.
Shefali Singh
Under Secretary (TPL-IV)
Download CBDT Order dated 30.03.2022 on Specified Date for PAN to become Inoperative in pdf format
Read the full text of Circular No. 7/2022 dated 30.03.2022 on Clarification with respect to relaxation of provisions of rule 114AAA(2)
Circular No.7 of 2022
F.No.370142/14/2022-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
*****
New Delhi, Dated the 30th of March, 2022
Sub.: Clarification with respect to relaxation of provisions of rule 114AAA of Income-tax Rules, 1962 prescribing the manner of making Permanent Account Number (PAN) inoperative - reg.
Instances had come to the notice of the Income-tax Department that multiple permanent account numbers (PANs) have been allotted to one person or one PAN has been allotted to more than one person. In order to have a robust way of de-duplication of PAN data base, Finance Act, 2017 with effect from 1st April, 2017, inserted section 139AA in the Income-tax Act, 1961 (the Act) making it mandatory for a taxpayer who is eligible to obtain Aadhaar, to quote his Aadhaar in the application form for PAN and return of income.
2. Sub-section (2) of section 139AA of the Act makes it mandatory for every person who has been allotted a PAN as on 1st July, 2017 to intimate his Aadhaar Number so that the Aadhaar and PAN can be linked. This is required to be done on or before a notified date, failing which the PAN shall become inoperative.
3. Accordingly, in case of failure to intimate the Aadhaar Number by the last extended notified date i.e. 31.03.2022, the PAN allotted to the person shall be made inoperative in accordance with the provisions of the Act. Further, the Finance Act, 2021 inserted a new section 234H in the Act to complete the process of PAN-Aadhaar linking for identifying bogus PANs. 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.
4. Further, rule 114AAA of the Income-tax Rules provides that if PAN of a person has become inoperative, he will not be able to furnish, intimate or quote his PAN and shall be liable to all the consequences under the Act for such failure. This will have a number of implications such as:-
(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
4.1 In addition to the above, the tax payer might face difficulty at various other fora like banks and other financial portals, as PAN is one of the important KYC criterion for all kinds of financial transactions.
5. Hence, in order to have smooth application of section 234H and existing rule 114AAA, it is clarified that the impact of sub-rule (2) of rule 114AAA i.e. 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. shall come into effect from 1 st April, 2023 and the period beginning from 1st April, 2022 and ending with 31 st March, 2023, shall be the period during which the said sub-rule shall not have its negative consequences of the nature referred to in the said sub-rule or specified in paras 4 and 4.1 above. However, the tax payer shall be liable to pay a fee in accordance with sub-rule (5A) of rule 114.
6. Hindi version to follow.
Shefali Singh
Under Secretary (TPL-IV), CBDT
Download CBDT Circular No. 7/2022 dated 30.03.2022 on Clarification with respect to relaxation of provisions of rule 114AAA(2) in pdf format
1 Comments
Foreigners and NRIs who file file taxes in India are always forgotten. There is no explanation regarding action to be taken by NRIs and PIOs who do not have an AADHAAR. The same circular could have given a few lines informing above categories about their PAN Status. In India there is generally a bias against NRIs and PIOs and a false notion that they evade taxes. But the problem is that they are never mentioned in CBDT circulars.
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