If you haven’t linked your PAN with Aadhaar, you could face serious financial consequences after March 31. Your PAN may become inoperative, leading to higher tax deductions and non-compliance under Section 206AB.
Did You Know, Even if your PAN becomes inoperative, it does not mean cancellation. You can reactivate it by linking it with Aadhaar. However, during the inoperative period, all transactions will attract higher tax rates.
Why PAN-Aadhaar Linking is Crucial
Failing to link PAN with Aadhaar before March 31 can result in multiple issues, including restricted financial transactions and non-compliance penalties. Here’s why you must act now:
1. PAN Becomes Inoperative
An inoperative PAN means:
- You cannot file your Income Tax Return (ITR).
- You cannot claim tax refunds.
- You may face higher TDS deductions.
2. Higher TDS Under Section 206AB
Under Section 206AB, if your PAN is inoperative, tax will be deducted at double the regular rate or at 5%, whichever is higher. This applies to:
| Transaction Type | Regular TDS Rate | TDS Rate (Non-Compliant) |
|---|---|---|
| Interest Income | 10% | 20% |
| Dividend Income | 10% | 20% |
| Professional Fees | 10% | 20% |
| Rent Payment | 5% | 10% |
If you are a business owner, failing to deduct TDS properly can also lead to penalties and disallowance of expenses.
3. Section 206AA: Mandatory Higher TDS Without PAN
If your PAN is inoperative, Section 206AA comes into effect, requiring TDS at 20% for transactions where PAN is mandatory. This can significantly impact salaried individuals and businesses alike.
Consequences of PAN Non-Compliance
| Issue | Consequence |
|---|---|
| PAN Becomes Inoperative | No ITR Filing, No Refunds |
| TDS Under Sec 206AB | 10%-20% Deduction Rates |
| PAN Not Provided (Sec 206AA) | Flat 20% TDS on Payments |
| High-Value Transactions | Banks May Block Accounts |
An inoperative PAN also makes it difficult to conduct financial transactions such as opening bank accounts, applying for loans, or investing in stocks and mutual funds.
Also Read: Flexi Loan Advantage: Low-Interest, Easy Access & Smart Borrowing!
Final Thoughts
March 31 is the final date to link PAN with Aadhaar. If you miss it, you may face higher TDS rates, restricted transactions, and compliance issues under Section 206AB. Act now to avoid unnecessary financial stress and penalties. Stay compliant and secure your tax benefits!
Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, financial, or other professional advice. While every effort is made to ensure the accuracy and reliability of the information, laws and regulations may change, and individual circumstances vary.
Readers are encouraged to consult with qualified professionals or official government resources for personalized guidance regarding their specific situations. The author and publisher disclaim any liability for decisions made or actions taken based on the information provided herein.
