PAN-Aadhaar linking: Tax Department defers penalty on TDS till May 31. Here is how to link both

Providing relief to those taxpayers who failed to link their Permanent Account Number (PAN) and Aadhaar Number by the June 30, 2023 deadline, the Income Tax Department has relaxed the deadline for imposing penalties on such cases and said that no action will be taken for a short deduction of TDS in case the assessee links his/her PAN with Aadhaar by May 31. 

As per income tax norms, an assessee needs to link his PAN with his biometric Aadhaar number, and if both are not linked, TDS is required to be deducted at double the applicable rate.

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In a circular on April 24, the Central Board of Direct Taxes (CBDT) said, “Several grievances have been received from taxpayers that they are in receipt of notices intimating that they have committed default of ‘short-deduction/collection’ of TDS/TCS while carrying out the transactions where the PANs of the deductees/collectees were inoperative. In such cases, as the deduction/collection has not been made at a higher rate, demands have been raised by the department against the deductors/collectors while processing of TDS/TCS statements.”

To redress the grievances faced by such deductors/collectors, the CBDT specified that for “the transactions entered into up to March 31, 2024, and in cases where the PAN becomes operative (as a result of linkage with Aadhaar) on or before May 31, 2024, there shall be no liability on the deductor/collector to deduct/collect the tax (at a higher rate)”.

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What will happen if you fail to link your with yourAadhaar

• Your PAN will become inoperative
• Pending tax refunds and interest on such refunds will not be issued.
• TDS will be required to be deducted at a higher rate.
• TCS will be required to be collected at a higher rate.

How to link PAN with Aadhaar Number

• Go to the Income Tax Department website: incometaxindiaefiling.gov.in
• Click on the ‘Link Aadhaar’ option under the ‘Quick Links’ section 
• Enter your PAN and Aadhaar number and click the ‘Validate’ button.
• Enter your name as per your Aadhaar card and mobile number and click the ‘Link Aadhaar’ button.
• Enter the OTP received on your mobile number and click the ‘Validate’ button.