The Central Board of Direct Taxes (CBDT) has come up with a new rule imposing a fee for delayed intimation of Aadhaar to the Income Tax department through linkage with permanent account number (PAN) beyond the March 31 deadline.

The rules have also been amended to make PAN inoperative after March 31, 2023, for non-intimation of Aadhaar. Also rules have been amended to re-operationalise PAN on payment of fee. 

Two-tier structure

The fee — more like a penalty — will have a two-tier structure, whereby ₹500 will be charged if the PAN-Aadhaar is linked within three months after the expiry of the deadline (March 31). 

This would mean that if PAN-Aadhaar is linked between April 1, 2022, and June 30, 2022, then the individual will be liable to pay ₹500 as a fee for linking the same. If the linking done after three months, then a fee of ₹1,000 will be charged, said the CBDT.

It maybe recalled that the rule for levying a penalty for not linking PAN-Aadhaar by the due date (March 31, 2022) was introduced as an amendment in the Finance Act 2021.

Late fees are payable at the time of making intimation as required under section 139AA(2).

Meanwhile, CBDT has clarified that till March 31, 2023, the PAN of the taxpayers who have not intimated their Aadhaar will continue to be functional for procedures such as furnishing of return of income and processing of refunds. After March 31, 2023, the PAN of taxpayers who fail to intimate their Aadhaar will become inoperative, and all the consequences under the Act for not furnishing, intimating or quoting the PAN will apply.

Amit Maheshwari, Tax Partner, AKM Global, a tax and consulting firm, said: “This will be a relief to taxpayers as PAN will not be inoperative till March 31, 2023, even if the Adhaar is not linked with the same. However, late fees will continue to apply. This will save tax payers from avoiding issues related to invalid PAN while applying for refund, filing their returns and higher tax rate for withholding. Further, this relaxation will save tax payers from the penal provisions as well.”

According to the notification, where a person fails to link his Aadhar with PAN by March 31, 2022, the person will be liable to pay a late fees upto Rs₹1,000. Further, the existing PAN number will become inactive.