If you have invested in a fixed deposit (FD) and have not linked your PAN (Permanent Account Number) with your Aadhaar, there are several implications for you. Due to non-linkage, your PAN will become inoperative, starting from July 1, 2023.
Here are the consequences of booking an FD without a PAN
1. Higher TDS (Tax Deducted at Source)
Instead of the usual 10% TDS rate, a higher rate of 20% will be deducted from the interest earned on your FD.
2. No TDS Credit
Without a valid PAN, you will not receive TDS credit from the Income Tax department. This credit is usually used to offset your tax liability.
3. No TDS Certificate
You will not be issued a TDS certificate, which is typically required for various purposes.
4. Invalidation of Exemption Certificates
Form 15G/H and other exemption certificates will be considered invalid. These forms are usually submitted to avoid TDS deduction, but without a PAN, penal TDS will be applied.
However, you can make your PAN operative again within 30 days by providing your Aadhaar details to the prescribed authority and paying a fee of Rs. 1,000.
If you fail to link your Aadhaar and PAN by the deadline, here's what will happen
1. No Refund
You will not receive any refunds against such inoperative PANs.
2. No Interest on Refunds
If there is any refund due, you will not receive any interest on it for the period during which your PAN remains inoperative.
3. Higher TDS/TCS Deduction
Any TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) deduction will attract a higher rate applicable to PANs that are not linked.
Furthermore, the non-linkage of Aadhaar and PAN will also limit your access to various banking services. Some of the services you may not be able to avail are:
- Booking a Fixed Deposit above Rs. 50,000.
- Depositing cash above Rs. 50,000.
- Obtaining a new Debit/Credit Card.
- Investing in or redeeming your Mutual Funds.
- Purchasing foreign currency beyond Rs. 50,000.
The author is a Chartered Accountant with 2 decades of experience into Accounting, Taxation, Auditing, Risk & Compliance, Credit Controls, Due diligence. Currently, the author is the founder and managing partner at RRL Global services.
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