Mutual fund SIPs to bank TDS: Here’s why you need to link PAN-Aadhaar by June 30
New Delhi: Aadhaar Card is now our one-stop solution for the documentation required for various services offered by the government and other agencies. For performing smooth financial transactions, the government had made linking of the PAN card with Aadhaar mandatory. This linking makes it easy for the government to track financial transactions and avoid any fraud or tax evasion. Further, it also puts a stop to multiple PAN card used by some individuals for tax evasion. However, there are still many whose PAN details haven’t been linked to Aadhaar. Giving such individuals another chance, the government has extended the last date of the linking PAN card with Aadhaar to June 30.
What to do if your PAN card has become inoperative?
You won’t be able to conduct financial transactions wherever quoting it is mandatory. The CBDT notification from February 2021 mentions that once the PAN has been linked with Aadhaar, it will become operative again from the date on which PAN has been linked with Aadhaar.
If the PAN card is linked after the deadline i.e. June 30, individuals will be liable for a fee that will be levied under section 234H. Hence, it is advised to link the two before the deadline passes.
According to income tax laws, if an individual’s PAN becomes inoperative because of not linking it with Aadhaar by June 30, and such person is required to furnish or quote PAN, then it shall be deemed that they have not furnished/intimated/quoted the required document. This would make them liable for all consequences under the Income Tax Act.
How Aadhaar-PAN link is important
Not linking PAN to Aadhar is akin to not having a PAN card the consequence of which are catastrophic for your financial life.
PAN enables the Income Tax Department to link all transactions of the assessee with the department. These transactions include tax payments, TDS/TCS credits, returns of income, specified transactions, correspondence and so on. It facilitates easy retrieval of information of assessee and matching of various investments, borrowings and other business activities of assessee.
Financial activities that require PAN include the opening of bank accounts, bank transactions, mutual fund transactions, stock market investments as all of these require PAN for Know Your Customer (KYC) norms.
It is important for you to check whether your PAN-Aadhar is seeded with the bank account. Failure to do this will lead to the bank charging double TDS. Incomplete KYC means the investors will not be able to make any further transactions in mutual funds, whether buying new units or withdrawing; or equity or any other investments.
Investors’ monthly SIP will also get affected such an investor wouldn’t be able to buy or redeem any units. Investors can be fined anywhere between Rs 10,000 for bank transactions of Rs 50,000 or higher.