Last updated on March 29th, 2023 at 12:28 pm
Section 234H Fee/Penalty for not linking PAN with Aadhaar
In Union Budget 2021, a specific penalty for non-compliance with the provisions u/s 139AA(2) was introduced. Section 234H levies a penalty for not linking PAN with Aadhaar within the prescribed due date. (Inserted vide Finance Bill 2021 w.e.f. 01.04.2021)
When did Income Tax make quoting Aadhaar mandatory?
As per section 139AA(1), If a person is eligible to obtain an Aadhaar number then it is mandatory to quote either the 12-digit Aadhaar number or the 28-digit enrolment ID of the Aadhaar number.
⇒ while making an application for the allotment of PAN in Form 49A.
⇒ while filing a return of income
(Inserted vide Finance Act 2017 w.e.f. 01.04.2017)
Who has to link Aadhaar and PAN?
As per section 139AA(2), if a person has been allotted PAN on or before 1st July 2017 and is eligible to obtain an Aadhaar number then it is mandatory to quote the 12-digit Aadhaar number within the prescribed date.
Note: The PAN which is allotted after 1st July 2017 is linked with Aadhaar (As quoting of Aadhaar or Aadhaar enrollment number was made mandatory in the PAN application form – Form 49A)
Who is not required to link Aadhaar and PAN?
As per section 139AA(1) and (2), it is mandatory for anyone and everyone to link their PAN with their Aadhaar if they have both irrespective of anything. If you are eligible to obtain aadhaar then you have to obtain aadhaar and link it.
As per section 139AA(3), the exemption from linking PAN with Aadhaar is provided only to the ones who do not possess an aadhaar or enrollment ID of Aadhaar. Individuals who are exempted from obtaining an aadhaar but can continue to hold PAN are
⇒ Non-resident taxable person
⇒ Not a citizen of India
⇒ Super Senior Citizens (80 years and above)
⇒ Individuals from Assam, Meghalaya, and Jammu & Kashmir
Note: Even if anyone from the above category of Individuals intends to obtain Aadhaar or has already obtained Aadhaar they will have to link it with PAN. And if it was not linked before 31st March 2022, it has to be linked with penalty u/s 234H.
What was the due date to link Aadhar with PAN without penalty?
The due date to link Aadhaar with PAN was extended multiple times in order to provide ample opportunities to comply with the requirement. Finally, the extended due date was 31st March 2022 notified vide Notification no. 113 dated 17th September 2021.
What is the penalty u/s 234H?| How to link PAN with Aadhar with a penalty?
If a person has defaulted in linking PAN with Aadhaar within the due date i.e. 31st March 2022. Then it can still be linked by paying penaltyu/s 234H i.e
⇒ Penalty to be paid was Rs 500/- if linked up to 30th June 2022
⇒ Penalty to be paid was Rs 1000/- if linked up to 31st March 2023 (extended up to 30th June 2023 vide notification no. 15/2023 dated 28th March 2023)
Note: The above penalty was reduced vide a Notification no. 17/2022 dated 29th March 2022
Note: The functionality to link Aadhaar with PAN was not functional from 30th march 2022 to 31st May 2022. It was reintroduced on 1st June 2022 with many technical glitches instead of 1st April 2022. Taxpayers who intended to link with the lower penalty of Rs 500 effectively got less than a month’s time to do the needful.
How to pay the penalty for PAN-Aadhaar linkage?
The penalty has to be paid in a SINGLE challan through the e-Pay Tax functionality available on NSDL (now Protean) Portal.
⇒ Major Head 0021 [Income-tax (Other than Companies)]
⇒ Minor Head 500 (Fee)
⇒ AY 2023-24
⇒ Challan ITNS 280
Note: There is no provision for refund of payments made under the minor head 500 (Fee).
When will PAN become inoperative?
Income Tax Rule 114AAA(1) – If a person is required to link PAN with Aadhaar as per section 139AA(2) and does not link within the prescribed due date for linking then PAN becomes inoperative i.e. 31st March 2022.
Notification no. 17/2022 dated 29th March 2022 – Prescribed date to link PAN with Aadhaar was extended from 31st March 2022 to 31st March 2023.
Circular No. 7/2022 dated 30th March 2022 – CBDT further relaxed that the consequences of inoperative PAN as per rule 114AAA(1) shall be deferred if linked within 31st March 2023.
Notification no. 15/2023 dated 28th March 2023 – Prescribed date to link PAN with Aadhaar was extended from 31st March 2023 to 30th June 2023. And consequences of an inoperative PAN will be applicable from the DATE to be specified by CBDT as per Income Tax Rule 114AAA(4).
Consequences of not linking PAN with Aadhaar | Consequences of a non-operative PAN| What if PAN is not linked with Aadhaar up to 31.03.2023 30th June 2023?
As per Rule 114AAA(3), when PAN becomes inoperative due to non-linking then the person shall face the negative consequences as if he had not applied for the PAN, not allotted the PAN, not furnished the PAN, or not quoted the PAN.
⇒ If any income tax refund is due, it will not be issued.
⇒ Interest on refund due shall not be payable for the period PAN is inoperative.
⇒ Provisions of sec 206AA shall be applicable and tax will be deducted at a higher rate.
⇒ Provisions of sec 206CC shall be applicable and tax will be collected at a higher rate.
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Very useful and helpful..