You May Have To Pay Rs 10,000 As Penalty To The Income Tax Department In July, Here’s Why

The timeframe for linking your PAN and Aadhaar is coming near, and you must fulfil it as a part of your complete KYC documents or records. According to the tax department, linking Aadhaar and PAN before the deadline of 30 June 2021 is mandatory since failure to fulfil the deadline would result in incomplete KYC of the taxpayer. An individual holding a PAN card that has not been linked with his or her Aadhaar card would be regarded as an invalid PAN cardholder or an individual with not having complete KYC documents after June 30, 2021.

Just like Aadhaar Card, a PAN Card is an important document for completion of KYC, as a result of incomplete KYC or not linking of PAN with Aadhaar will enable an individual to face unwanted interruptions. When a PAN card becomes invalid, an individual's savings account is considered as an 'Incomplete KYC Account'. In case, the individual receives interest on a savings account in excess of Rs 10,000, the TDS (Tax Deduction at Source) rate would be doubled, i.e. 20%, since the TDS rate on bank accounts seeded with PAN details cards is 10%. In the instance of an invalid PAN card, if an individual deposits Rs 50,000 or more, the Income Tax Department has said that the depositor may be fined a penalty of up to Rs 10,000 as per section 272B of the Income-tax Act.

If your PAN is invalid, you will be unable to submit your income tax return, establish a bank, post office, demat or fixed deposit account, or conduct certain transactions, and you will be subject to a higher TDS and penalty. If you do not link your PAN with Aadhaar on or before June 30, 2021, your PAN will not only become inactive, but you will also be subject to a penalty of up to Rs 1,000, according to the Income Tax Department. As a result, bank account holders are urged to link their Aadhaar card with their PAN card on or before the deadline to avoid the above discussed unwanted financial hitch.