Failing to link the two cards could result in several restrictions in banking, including a frozen fixed deposit.
: Income Tax Department’s late fee of Rs. 1,000 for linking Aadhaar with a Permanent Account Number (PAN) card is causing inconvenience for lower-middle class and Below Poverty Limit (BPL) Individuals. Some are even likely to forego the process.
Aryan, a tailor who earns around Rs. 15,000 a month, said, “I cannot afford to pay Rs. 1,000. People pay almost the same amount for a passport these days. It is too high for me and I am opting out of this, as I have no business with PAN cards, banks, or income tax anyway.”
A PAN Card is issued by the Income Tax Department. It has several uses, including tax filings, taking loans, applying for debit or credit cards or making investments. As per May 2022 notification by the Central Board of Direct Taxes, a PAN is mandatory for the opening of a current account or cash credit account with a bank or post office.
The government has recently issued a notification that all PAN cards will be discontinued if individuals fail to link them with their Aadhaar cards before March 31, 2023. Although the Income Tax Portal has made it available for everyone to link their Aadhaar cards with PAN cards, it is charging a late fee of Rs. 1,000 for those who have not done so before March 31, 2022.
Failing to link Aadhaar with PAN Card will lead to several restrictions, other than the PAN card being frozen. Individuals will not be able to withdraw or deposit more than Rs. 50,000 in their bank accounts. Fixed Deposits will also be frozen, while the individual cannot invest in stocks or bonds.
While the government has given enough time for people to link their Aadhar cards with their PAN cards, the penalty of Rs. 1,000 seems unjustified, said Darshil Dana, a resident of Gujarat on Twitter.
Aakarshi, a student at Christ University, Ghaziabad, said, “I was not even 18 when they put out the initial notification. But since I have now turned 18, I will have to pay Rs. 1,000, which is ridiculous, especially for students like us.”
PAN cards are essential even for students, especially when depositing over Rs. 50,000 in one single day or investing in equity or mutual funds. The database of trading platform Groww, as reported by Mint, shows that 2020 witnessed a 226.12 percent increase in the number of first-time investors from the age group 18-20.
As per the circular from the Income Tax Department dated March 30, 2022, “Every person who has been allotted a PAN as on July 1, 2017, and is eligible to obtain an Aadhaar number is required to link PAN with Aadhaar on or before March 31, 2022. Taxpayers who failed to do so are liable to pay a non-refundable fee of Rs. 500 till June 30, 2022, and thereafter a fee of Rs. 1,000 will be applicable before submission of PAN-Aadhaar linkage request.”
Individuals aged more than 80, Non-Resident Indians (NRIs) and residents of Assam, Meghalaya, and Jammu and Kashmir are exempted from PAN-Aadhaar linkage.
Anshika Katara, Policy Consultant at Inclusive Minds and a public policy and governance expert said that the government should consider waving off the late fee if it wants more citizens to link PAN and Aadhaar cards.
“The fee should be waived off for low-income groups and extensive campaigns and centers need to be set up to help people with low income to link their Aadhaar with PAN cards. There should be digital campaigns to promote this process,” she said.
The Grievance Cell (GC) Officer and the Principal Commissioner of the Income Tax Department, Bangalore, refused to comment on the issue.