Consequences of Inoperative Account – Dated 25/01/2024
Who Falls Under the Exempt Category for PAN-Aadhaar Linking?
The exempt category individuals are not required to link PAN-Aadhaar by 30th June 2023. The exempt category includes:
Individuals residing in the states of Jammu and Kashmir, Assam, and Meghalaya.
A non-resident taxable person as per the Income-tax Act, 1961.
People aged more than 80 years (Super Senior Citizens).
Persons who are not citizens of India.
Consequences of Not Linking PAN with Aadhaar Card
Failure to link PAN with Aadhaar within the deadline results in the PAN becoming inoperative, leading to the following consequences:
Tax Return Processing: Pending income tax returns will not be processed, and refunds will not be issued to inoperative PAN cards.
TDS/TCS Deduction: Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) will be applicable at a higher rate.
Credit and Certificates: The TCS/TDS credit will not appear in Form 26AS, and TCS/TDS certificates will not be available.
Declaration Restrictions: Taxpayers will be unable to submit Form 15G/15H declarations for nil TDS.
Restrictions on Financial Transactions: The following transactions will not be possible with an inoperative PAN:
Opening a bank account.
Issuance of debit/credit cards.
Purchase of mutual fund units.
Cash deposits with a bank or post office exceeding Rs.50,000 in a day.
Purchase of a bank draft or pay order in cash exceeding Rs.50,000 in a day.
Time deposits with banks, Nidhi, Non-Banking Financial Corporations (NBFCs), etc., exceeding Rs.50,000 or aggregating more than Rs.2,50,000 in a financial year.
Payments for one or more prepaid payment instruments (as defined by the Reserve Bank of India) through bank draft, pay order, or banker’s cheque aggregating more than Rs.50,000 in a financial year.
Sale or purchase of goods or services exceeding Rs.2,00,000 per transaction.
Bank transactions exceeding Rs.10,000.
Reactivating an Inoperative PAN
A PAN card can be made operative again within 30 days by linking it with Aadhaar and paying a fee of Rs.1,000 to the prescribed authority.