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• Due to the outbreak of COVID-19, the Finance Ministry has extended the deadline of the Aadhaar-PAN linking till the 31st of March 2021.

• The Finance Minister introduced a new facility in Budget 2020 where individuals can get instant Permanent Account Number (PAN) through their Aadhaar without submitting a detailed application form. To know, how to apply Click Here

• The Budget 2020 also allowed e-commerce operators to deduct TDS (tax deducted at source) on all payments participants at 1% rate with PAN/Aadhaar and at 5% rate in non-PAN/Aadhaar cases.

PAN without Aadhaar is invalid PAN

The Government has mandated use of Aadhaar Number in most of the Subsidy Schemes where the benefit of Subsidy is directly transferred to beneficiary instead of the earlier practice of through Suppliers. This has resulted in plugging leakages in Subsidies, benefits of subsidy directly to those who are eligible, targeted delivery of subsidy and less burden of subsidy on Government Exchequer.

To take the advantage of power of Aadhaar in curbing the malpractices related to the use of PAN, the Government has decided to compulsorily Link PAN to Aadhaar.

In order to curb the loopholes in using the Duplicate PAN Numbers, the Government has w.e.f. 1st July, 2017, mandated use of Aadhaar Number along with PAN. Now, if you do not have Aadhaar Linked to PAN, your PAN will be deemed to be invalid. Hence, from 1st July, 2017, PAN will go along with Aaadhar in order to continue it to be VALID.

Some of the common questions are answered below for the benefit of readers:

Q 1. Who is liable to link PAN with Aadhaar?

Every individual, who has resided in India for 182 days or more in the last 12 months, immediately preceding the date of application for Aadhaar, is liable to Link Aadhara NUMBER TO PAN.

Q 2. Where is the Aadhaar required to be quoted ?

The Government via Finance Act, 2017, has introduced Section 139AA, wherein quoting of Aadhaar Number is made compulsory:

• In Application Form for New PAN
• In the Return of Income (ITR)
• In the Income Tax E-filing Account (subject to Government Notification)

Q 3. What if Aadhaar is applied for and Aadhaar number is not allotted?

If Aadhaar is applied for and Aadhaar Number is not allotted, Enrolment ID in the Slip of Application of Aadhaar Number shall be quoted.

Q 4.What if Aadhaar is not linked to PAN?

If the Aadhaar is not linked to PAN, the PAN Number will not be considered as Valid. Further, the Income Tax Act will apply to that person as if that person has not applied for PAN at all.

Q 5. What if the PAN becomes invalid?

If Aadhaar is not liked to PAN and PAN becomes Invalid, some illustrative lists of transactions, which are not allowed to be done, are as follows:

• Buying any Motor vehicle (other than two-wheelers)
• Purchasing jewellery worth more than Rs.5 lakh
• Opening an account with any Bank / NBFC / Co-Operative Bank, whether it is saving or current account
• Applying for Debit / Credit Card
• Opening a DEMAT Account
• Converting foreign exchange
• Buying Mutual Fund irrespective of size of investment
• Buying Debentures / Bonds
• Deposits in cash with any bank / co-operative bank exceeding Rs. 50,000
• Buying Life insurance Policy, with yearly premium exceeding Rs. 1,00,000
• Share Trading
• Telephone connection


Hope you will comply with the good intention of the Government in order to help it to curb malpractices related to the use of PAN and consequently, to curb the black money.

Disclaimer: Before taking any action on the basis of the above information, one is advised to take legal opinion from a learned tax practitioner. The author is not liable for any action done on the basis of the above information/opinion

The author is a practicing Chartered Accountant and can also be reached at sachindjain@icai.org

Also Read:
How to apply for an instant PAN Card?



Published by

CA Sachin D Jain
Category Income Tax   Report

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