The income tax department urged taxpayers on Tuesday to link their PAN with Aadhaar by May 31, 2024, to avoid higher tax deductions. "Please link your PAN with Aadhaar before May 31, 2024, if you haven't already, in order to avoid tax deduction at a higher rate," the department posted on X. According to the rules, if a Permanent Account Number (PAN) isn't linked with biometric Aadhaar, Tax Deducted at Source (TDS) must be deducted at twice the normal rate.
In another post, the department reminded reporting entities, including banks and forex dealers, to file their SFT (Statement of Specified Financial Transactions) by May 31 to avoid penalties.
Last month, the department issued a circular reassuring taxpayers that no action would be taken for short TDS deductions if PAN is linked with Aadhaar by the end of May.
"The deadline to file SFT is May 31, 2024. Avoid penalties by filing accurately and on time," the department stated.
Entities required to file SFT returns include forex dealers, banks, sub-registrars, NBFCs, post offices, issuers of bonds/debentures, mutual fund trustees, and companies paying dividends or buying back shares. These institutions must report certain financial transactions or any reportable accounts they manage. Delays in filing SFT returns can result in penalties of up to ₹1,000 per day, and non-filing or inaccurate statements may also incur penalties.
The income tax department uses SFT to monitor high-value transactions conducted by individuals. When a deductee's (whose tax has been deducted) PAN is not linked to Aadhaar, TDS is deducted at a higher rate, making the PAN inoperative.
On April 23, 2024, the Central Board of Direct Taxes (CBDT) issued a circular to address complaints from deductors and collectors who faced notices for "short-deduction/collection" of TDS/TCS due to unlinked PANs. The circular specified that for transactions up to March 31, 2024, if the PAN is linked with Aadhaar by May 31, 2024, deductors/collectors will not be liable for penalties related to short deductions.
According to the CBDT circular dated April 23, 2024, “With a view to redressing the grievances faced by such deductors/collectors, the Board, in partial modification and in continuation of the Circular No. 03 of 2023, hereby specifies that for the transactions entered into up to 31.03.2024 and in cases where the PAN becomes operative (as a result of linkage with Aadhaar) on or before 31.05.2024, there shall be no liability on the deductor/collector to deduct/collect the tax under section 206AA/206CC, as the case maybe, and the deduction/collection as mandated in other provisions of Chapter XVII-B or Chapter XVII-BB of the Act, shall be applicable."
Steps to link PAN with Aadhaar through e-filing site:
Step 1: Visit Income Tax Site - https://www.incometax.gov.in/iec/foportal.
Step 2: Under ‘Quick Links’, click on ‘Link Aadhaar’. Provide the PAN, Aadhaar number, and name as mentioned in the Aadhaar card.
Step 3: Enter details such as PAN Number, Aadhaar number, your name on Aadhaar, and your mobile number, Tick the square if only the birth year is mentioned in the Aadhaar card, and also tick the box where you agree to get your Aadhaar details validated. Click on ‘Link Aadhaar’.
Step 4: Enter the Captcha code. The OTP will be sent to the registered mobile number and click the validate button.
Only after paying an amount of ₹1,000 can you link your PAN with Aadhaar.
