For seeding Aadhaar with PAN the Income Tax Department has recently extended the deadline to June 30, 2021 as a huge relief to the taxpayers. As a result, failing to do this compulsory task before the deadline may make your PAN inoperative, and you may also face a penalty. Having an operative PAN Card is a must as it is required to make financial transactions and particular investments such as opening a basic savings bank deposit account, issuance of a debit or credit card, opening a Demat account, purchasing mutual fund units and so on, which means that resulting to an inoperative PAN Card or incomplete KYC (Know Your Customer) you will not be allowed to handle all these transactions. By considering this matter you should and should link your PAN with Aadhaar on or before the deadline or else you have linked before then it is the best time to check the status to get a confirmation result. So here is the list of transactions or financial tasks that you would not be able to settle starting from July due to the non-linking of PAN with Aadhaar.
TDS on a fixed deposit scheme is normally deducted by the bank if the interest on the FD exceeds a tax-mandated level. If the FD is kept with a bank, the maximum cap is Rs 50,000 for senior people and Rs 40,000 for non-seniors. If the interest amount for the fiscal year exceeds Rs 40,000, the TDS rate on fixed deposits (FDs) is 10%. If you do not present your PAN Card to the bank, the TDS rate on fixed deposit interest is 20% under current Income Tax laws. So it is clear that non-linking of PAN with Aadhaar will make your PAN inoperative, for which you will have to face higher TDS rates if you have a fixed deposit account with a bank.
Incomplete KYC or an inactive PAN will prevent subsequent transactions with banks, mutual funds, and other investments. In the event of an incomplete KYC, one cannot invest or withdraw funds from mutual fund investments. In addition, you may be disallowed access to a mutual fund consolidated statement due to an inoperative PAN card. PAN, as it is often known, is required for payment of an amount over Rs. 50,000 to a Mutual Fund for the purchase of its units or the acquisition of debentures or bonds. Having an inoperative PAN would almost certainly get you in trouble.
PAN is also mandated for the sale or purchase of a motor vehicle or a vehicle other than a two-wheeled vehicle, payment in cash for a bill of an amount surpassing Rs. 50,000 to a hotel or restaurant, payment in cash of an amount surpassing Rs. 50,000 in relation to travel to any foreign nation, and deposits of cash exceeding Rs. 50,000 with a banking company or a co-op on any given day. For the acquisition of bank draft or pay orders, payment in cash for an amount surpassing Rs. 50,000. A time deposit of more than Rs. 50,000 or more than Rs. 5 lakh in a financial year with a banking firm or a co-operative bank, a post office, or a non-banking financial firm.
Payment of an amount of over Rs. 50 000 in the fiscal year for a pre-payment instrument or by cash, bank draft or payment order or bankers' cheque for one or more pre-paid payment instruments. Payment of more than Rs. 50,000 to an insurer as a life insurance premium in a fiscal year, or a contract for the sale or purchase of securities other than shares for a value surpassing Rs. 1 lakh per transaction. Any person who sells or buys shares of a firm that is not listed on a recognised stock market for more than Rs. 1 lakh per transaction. Any immovable property sold or purchased for more than Rs. 10 lakh or appraised by a stamp valuation body as defined in Section 50C of the Act. Sale or acquisition of goods or services of any kind other than those described above for more than Rs. 2 lakh per transaction
In Budget 2021, the Central Government included a new section 234H to the Income Tax Act of 1961. If a PAN is not linked with Aadhaar on or before the specified time, a penalty would be levied under this provision. Individuals who link their Aadhaar and PAN after the deadline would face a Rs 1000 penalty. As a result, if you do not link your Aadhaar with your PAN before the deadline, you will be unable to carry out the above-mentioned transactions. To know how to link Aadhaar with PAN on the new income tax portal, click here.