PAN Card Update: PAN Card (Permanent Account Number) is an ID card issued by the Income Tax Department in India which is an important document for the Income Tax Department.

PAN Card Holders Alert: Income Tax Department Warns of ₹10,000 Penalty for Specific Violations

The Income Tax Department has issued a stern warning to PAN (Permanent Account Number) cardholders, stating that a penalty of ₹10,000 could be levied for certain violations of the Income Tax Act. This alert aims to ensure compliance and prevent potential legal and financial repercussions for taxpayers.

While the PAN card is a crucial document for various financial transactions and tax-related activities in India, holding multiple PAN cards or providing incorrect PAN details can attract significant penalties under Section 272B of the Income Tax Act, 1961.

Key Scenarios Attracting the ₹10,000 Penalty:

  • Holding Multiple PAN Cards: Possessing more than one PAN card is a serious offense. The Income Tax Department tracks financial transactions through the unique PAN identifier, and having multiple cards can lead to discrepancies and potential accusations of fraudulent activities, including tax evasion. Individuals who have inadvertently been allotted more than one PAN are obligated to surrender the additional cards to their jurisdictional Assessing Officer for deactivation.
  • Quoting Incorrect PAN: Providing an incorrect PAN number in financial documents, tax returns, or to entities responsible for deducting or collecting tax (TDS/TCS) can also result in the ₹10,000 penalty. It is crucial for individuals to ensure the accuracy of their PAN details in all relevant transactions.

Recent Emphasis on Compliance:

This alert comes amidst the Income Tax Department’s ongoing efforts to streamline tax administration and curb tax evasion. Initiatives like “PAN 2.0” incorporate enhanced technological measures, including dynamic QR codes, to identify duplicate PAN requests and incorrect information more effectively.

Consequences Beyond Monetary Penalties:

Apart from the ₹10,000 fine, holding multiple or providing incorrect PANs can lead to other complications:

  • Legal Action: Individuals found using multiple PANs for tax evasion may face further legal consequences under income tax laws.
  • Financial Process Complications: Having multiple PANs can create confusion and complications in various financial processes, such as opening bank accounts and filing tax returns.
  • Negative Impact on Credit Profile: Banks and financial institutions may view individuals with multiple PANs as potential fraudsters, negatively impacting their creditworthiness and loan approvals.

What PAN Card Holders Should Do:

  • Verify PAN Details: Ensure the accuracy of the PAN mentioned in all financial documents and transactions.
  • Check for Duplicate PANs: Individuals unsure if they possess more than one PAN should take steps to verify this.
  • Surrender Additional PANs: If you hold multiple PAN cards, immediately inform your Jurisdictional Assessing Officer and follow the procedure to surrender the Additional PAN for deactivation. This typically involves filling out a PAN change request form and mentioning the PAN you wish to retain along with the PAN(s) to be surrendered.
  • Stay Informed: Keep abreast of the latest rules and regulations issued by the Income Tax Department regarding PAN cards.

The Income Tax Department’s alert serves as a timely reminder for all PAN cardholders to ensure compliance with the regulations. By taking necessary precautions and rectifying any discrepancies, individuals can avoid the hefty penalty and potential legal and financial complications.

Importance of linking PAN with Aadhaar card

  • The PAN card of a person will become inoperative when it is not linked to an Aadhaar card.
  • PAN-Aadhaar linking is required when filing the Income Tax Return (ITR). The IT department may reject the ITR when PAN and Aadhaar are not linked.
  • PAN and Aadhaar cards are required to be submitted to get government services, such as applying for a passport, obtaining subsidies and opening a bank account. Thus, it is difficult to access government services when PAN and Aadhaar cards are not linked.
  • When the PAN-Aadhaar is not linked, getting a new PAN card may be difficult if the old one is damaged or lost since it is mandatory to mention the Aadhaar card number while applying for a new PAN card.

Consequences of not linking PAN with Aadhaar card

When the PAN-Aadhaar cards are not linked within the last date, it becomes inoperative as a result of which:

  • Taxpayers cannot file ITR or claim ITR with inoperative PAN cards.
  • The pending returns will not be processed, and pending refunds will not be issued to inoperative PAN cards.
  • The TCS/TDS will be applicable at a higher rate.
  • The TCS/TDS credit will not appear in Form 26AS, and TCS/TDS certificates will not be available.
  • Taxpayers will be unable to submit 15G/15H declarations for nil TDS.
  • The following transactions cannot be done since the PAN card will be inoperative:
    • Open a bank account.
    • Issue of debit/credit cards.
    • Purchase of mutual funds units.
    • Cash deposit with a bank or post office during a day exceeding Rs.50,000.
    • Purchase of a bank draft or pay order in cash exceeding Rs.50,000 in a day.
    • A time deposit with banks, Nidhi, Non-Banking Financial Corporations (NBFCs), etc., exceeding Rs.50,000 or aggregating to more than Rs.2,50,000 during a financial year.
    • Payment for one or more prepaid payment instruments as defined by the Reserve Bank of India (RBI) through bank draft, pay order or banker’s cheque aggregating to more than Rs.50,000 in a financial year.
    • Sale or purchase of goods or services by any person more than Rs.2,00,000 per transaction.
    • All bank transactions exceeding Rs.10,000.

However, the PAN can be made operative again in 30 days, upon intimation of Aadhaar number to the prescribed authority after payment of fee of Rs.1,000.

Penalty for non-linking of PAN with Aadhaar card

The taxpayers who have not linked their PAN-Aadhaar within the last date of 30th June 2023, can do so by paying a late penalty of Rs.1,000. They must pay the penalty before filing for the PAN-Aadhaar link on the Income Tax website. However, they need to ensure they have a valid PAN number, Aadhaar number and mobile number to pay the penalty.

Follow the below steps to pay the penalty for re-activating an inoperative PAN card:

Step 1: Visit the Income Tax e-Filing Portal.

Step 2: Click the ‘e-Pay Tax’ option under the ‘Quick Links’ heading.

Step 3: Enter the ‘PAN’ number under ‘PAN/TAN’ and ‘Confirm PAN/TAN’ column, enter mobile number and click the ‘Continue’ button.

Step 4: After OTP verification, it will be redirected to e-Pay Tax page. Click the ‘Continue’ button.

Step 5:  Click the ‘Proceed’ button under the ‘Income Tax’ tab.

Step 6: Select Assessment Year as ‘2023-24’ and ‘Type of Payment (Minor Head)’ as ‘Other Receipts (500)’ and click the ‘Continue’ button.

Step 7: The applicable amount will be pre-filled against ‘Others’ option. Click ‘Continue’ button and make the payment.

You can pay the late penalty on Income Tax e-filing Portal through net banking, debit card, over the counter, NEFT/RTGS or payment gateway option. However, you can pay the penalty through the payment gateway option when you have a bank account with the following authorised banks:

  • Axis Bank
  • Bank of Baroda
  • Bank of India
  • Bank of Maharashtra
  • Canara Bank
  • Central Bank of India
  • City Union Bank
  • Federal Bank
  • HDFC Bank
  • ICICI Bank
  • IDBI Bank
  • Indian Bank
  • Indian Overseas Bank
  • IndusInd Bank
  • Jammu & Kashmir Bank
  • Karur Vysya Bank
  • Kotak Mahindra Bank
  • Punjab & Sind Bank
  • Punjab National Bank
  • RBL Bank
  • South Indian Bank
  • State Bank of India
  • UCO Bank
  • Union Bank of India 

After making the payment, proceed to link your PAN with Aadhaar card.

How to link a PAN with an Aadhaar card?

Taxpayers can link their PAN with their Aadhaar after four to five days of paying the penalty by following the steps below:

Step 1: Go to the Income Tax e-filing portal.

Step 2: Under the ‘Quick Links’ heading on the left-hand side of the homepage, click on the ‘Link Aadhaar’ option.

Step 3: Enter the ‘PAN’ and ‘Aadhaar Number’ and click the ‘Validate’ button.

Step 4: A pop-up message stating ‘Your payment details are verified’ will appear when the penalty payment has been verified. Click the ‘Continue’ button to submit the linking request.

Step 5: Enter the required details and click the ‘Link Aadhaar’ button.

Step 6: Enter the OTP received on the mobile number.

Step 7: The request to link the PAN-Aadhaar card will be successfully submitted. 

A taxpayer can also visit a PAN card centre, fill out the appropriate form and submit it with photocopies of PAN and Aadhaar cards for PAN-Aadhaar linking.