Income Tax Return (ITR) Filing: What Are The Consequences Of Inoperative PAN Card If Not Linked With Aadhaar

The Income Tax Department has highlighted key consequences of an 'inoperative' Permanent Account Number (PAN) card after issues were raised by certain NRIs/OCIs and PAN holders. Since the income tax return filing due date is nearing, the department clarified that an 'inoperative' PAN does not mean they are 'inactive' and hence one can still file their ITR.

In a notification through Twitter dated July 18, the IT department said, "concerns have been raised by certain NRIs/ OCIs regarding their PANs becoming inoperative, although they are exempted from linking their PAN with Aadhaar."

Further, it added that "PAN holders, whose PANs have been rendered inoperative due to non-linking of PAN with Aadhaar, have expressed concern over certain consequences of PAN becoming inoperative."

For these queries, the department clarified the following:

1. ITD has mapped the residential status of NRIs in case they have filed the ITR in any of the last 3 AYs or they have intimated their residential status to the Jurisdictional Assessing Officer (JAO). The PANs have been rendered inoperative, in case any one of the above-mentioned criteria is not met.

The NRIs whose PANs are inoperative are requested to intimate their residential status to their respective JAO along with supporting documents with a request to update their residential status in the PAN database.

2. The PANs of OCIs/foreign citizens, who may have applied for PAN under resident status and have not corrected/updated their residential status to the Jurisdictional Assessing Officer (JAO) or have not filed ITR in any of the last 3 AYs, have been rendered inoperative.
The OCIs/foreign citizens are requested to intimate their residential status to their respective JAO along with supporting documents with a request to update their residential status in the PAN database.

Lastly, the department said, "It is clarified that an inoperative PAN is not an inactive PAN. One may file the Income Tax Return (ITR), irrespective of PAN becoming inoperative."

Furthermore, the department pointed out three consequences of 'inoperative' PAN. These are:

1. Pending refunds and interest on such refunds will not be issued to inoperative PANs.

2. TDS will be required to be deducted at a higher rate for inoperative PANs in accordance with section 206AA.

3. TCS will be required to be collected at a higher rate for inoperative PANs following section 206CC.

The deadline for filing an Income Tax Return (ITR) for financial year 2022-23 (assessment year 2023-24) is set on July 31.