Consequences of PAN becoming inoperative as per the newly substituted rule 114AAA

Last updated: 29 March 2023

Save Share

Quick Summary

This notification clarifies the consequences of your Permanent Account Number (PAN) becoming inoperative due to failure to link it with your Aadhaar number. From 1st July 2023, if your PAN is inoperative, you will not receive tax refunds or interest on them. Additionally, tax will be deducted or collected at a higher rate from you. You can make your PAN operative again by linking your Aadhaar, which will incur a fee of one thousand rupees.

Circular No. 03 of2023
F. No. 370142/14/2022-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, Dated the 28th March, 2023

Sub.: Consequences of PAN becoming inoperative as per the newly substituted rule 114AAA - reg.

Consequent to the notification substituting rule 1I4AAA of the Income-tax Rules, 1962 (the Rules) vide notification no. 15 of 2023 dated 28th March, 2023, it is hereby clarified that a person who has failed to intimate the Aadhaar number in accordance with section 139AA of the Income-tax Act, 1961 (the Act) read with rule 114AAA shall face the following consequences as a result of his PAN becoming inoperative:

(i) refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made to him;

(ii) interest shall not be payable to him on such refund for the period, beginning with the date specified under sub-rule (4) of rule 114AAA and ending with the date on which it becomes operative;

(iii) where tax is deductible under Chapter XVJJ-B in case of such person, such tax shall be deducted at higher rate, in accordance with the provisions of section 206AA;

(iv) where tax is collectible at source under Chapter XVJJ-BB in case of such person, such tax shall be collected at higher rate, in accordance with the provisions of section 206CC.

2. These consequences shall take effect from 1st July, 2023 and continue till the PAN becomes operative. A fee of one thousand rupees will continue to apply to make the PAN operative by intimating the Aadhaar number.

3. The consequences of PAN becoming inoperative shall not be applicable to those persons who have been provided exemption from intimating Aadhaar number under the provisions of sub-section (3) of section 139AA of the Act.

4. This is in supersession of the Circular No. 07 of2022 ofCBDT dated 30th March, 2022.

5. Hindi version to follow.

P. Amrutha varshini
Under Secretary (TPL-IV), CBOT

Copy to:
1. PS to FMI OSD to FMI PS to MoS(F)/ PS to MoS(F)
2. OSD to Secretary (Revenue)
3. Chairman, CBDT & All Members, CBDT
4. All Pro DOsIT/ Pro CCsIT
5. All Joint Secretaries! CsITI Directorsl Deputy Secretaries/ Under Secretaries of CBDT
6. The C&AO of India
7. The JS & Legal Adviser, Ministry of Law & Justice, New Delhi
8. PCIT (M&TP), Official Spokesperson ofCBDT
9. Web manager, ADO (S)-4, 0 /0 Pro DOlT (Systems) for uploading on official website.
10. JCIT (Database Cell) for uploading on www.irsofficersonline.gov.in

FAQ :

If your PAN becomes inoperative, you will not receive any tax refunds or interest on those refunds. Tax will also be deducted or collected at a higher rate from you.

These consequences will take effect from 1st July 2023 and will continue until your PAN becomes operative again.

You can make your PAN operative by intimating your Aadhaar number. A fee of one thousand rupees will apply.

Yes, these consequences do not apply to individuals who have been exempted from intimating their Aadhaar number under the provisions of sub-section (3) of section 139AA of the Income-tax Act.

The notification refers to the newly substituted rule 114AAA of the Income-tax Rules, 1962, which outlines the consequences of PAN becoming inoperative.