Should You Link Your PAN and Aadhaar?

Do you get to hear a lot about filing ITR and linking Aadhaar and PAN these days? Most of us tend to assume that filing ITR is not mandatory and is burdensome; and hence, we often end up not doing it. Did you know that many people get back a substantial amount of money by filing ITR? Sounds interesting? Well, did you also know that it was earlier compulsory to link your PAN with your Aadhaar in order to file your ITR? Before we get into the need for linking PAN and Aadhar for ITR, let us first briefly understand what ITR is, how to file it and the why to file it.

PAN-Aadhar Link Final Deadline Update

31st March 2021 has been set as the deadline for linking PAN and Aadhar,  by the Income Tax Department. On failing to link Aadhar and PAN before the last date, the PAN card will turn inoperative from 1 April. If someone tries to use a PAN card that has turned inoperative, they may also be fined ₹10,000. The declaration came from  CBDT (Central Board of Direct Taxes) in a notification on February 13, 2020.

PAN is an essential element in many financial transactions, such as property sale, banking transactions, investing in stocks/mutual funds, etc.

What is ITR?

ITR or Income Tax Return is the procedure through which a taxpayer files the information about his/her income, the source of such income, and the income tax paid or payable to the Income Tax Department. The core revenue of government is generated by levying taxes, which is utilized for the welfare of the economy, to improve educational facilities, hospitals, defense, etc. There are income-tax laws in place to help the government in proper implementation and collection of taxes. According to the Income Tax Act of 1961 and the Income Tax Rules of 1962 citizens are required to file returns with the Income Tax Department on a yearly basis.

Why Do You Need to File ITR?

Filing income tax returns is a way to inform the government about the income you have earned during a financial year. As it is a yearly affair, it should be completed before the specified deadline. Most of us think that filing ITR is not mandatory and end up dismissing it. This isn’t a healthy perspective. Even though ITR filing is not mandatory for some individuals, there are certain benefits that one can avail through it. Here are a few of those:

Claiming refund: If you have had TDS (Tax Deducted at Source) deducted from your salary, you can claim the same, and it would be refunded to your bank account.

Avoid Penalty: You may be charged a huge penalty of Rs. 5000 if you are liable to pay tax but haven't paid it and haven’t filed ITR. Filing returns is a voluntary activity, but there are times when you may be facing legal complications.

How to File ITR?

Filing ITR can be done in two ways – first comes the conventional offline method, where you visit the Income Tax Department office and manually do it; the second way is to file the returns online. E-filing has become increasingly popular in of late. It is relatively easier when compared to the traditional offline filing as it doesn’t involve tedious paperwork. One more added advantage is that it can be done from anywhere. It’s a simple, easy and extremely convenient process.

Is It Necessary to Link PAN and Aadhaar?

The Supreme Court of India had earlier announced that linking PAN and Aadhaar is mandatory in order to file Income Tax Returns. However, Budget-2019 offered a huge relief to those who hadn't or weren't able to link their PAN and Aadhaar by making these two crucial identity documents interoperable. Although it's not mandatory anymore, there's no harm in streamlining your identity documents, right?

What If You Don't Link PAN and Aadhaar?

Earlier, if you hadn't linked your PAN and Aadhaar card, you would not be able to file your Income Tax Returns. Moreover, there was a fair chance of your PAN card being cancelled! Now, after Budget-2019, filing ITR won't be a problem anymore if you haven't linked the two.

Different Ways to Link PAN and Aadhaar

If you're up for linking your PAN and Aadhaar, let's help you with three different methods to get it done

Through Online Portals

Linking Aadhaar card and PAN card can be done through the Income Tax Department, NSDL and UTIITSL websites.

• Visit the Income Tax e-Filing website.

• Enter your PAN and Aadhaar details.

• Enter your name as per your Aadhaar card.

• If you have only your birth year mentioned in Aadhaar, check the box.

• Now enter the captcha code and click on the Link Aadhaar button.

• You will receive a pop-up message that your Aadhaar will be successfully linked with your PAN.

Through SMS

On June 29, 2017, Central Board of Direct Taxes (CBDT) released a notification regarding the different methods to link Aadhaar and PAN other than using the web portal. One of those methods is by sending a simple SMS to UTI Infrastructure Technology and Services Limited (UTIITSL) or NSDL e-Governance Infrastructure Limited. You can send an SMS in the format mentioned below to the either 56161 or 567678>

FORMAT: UIDPAN<SPACE><12 digit Aadhaar><SPACE><10 digit PAN>

Manual Linking

Central Board of Direct Taxes (CBDT) also released the traditional or the manual method of linking PAN and Aadhaar to ease the problems of taxpayers who aren’t very tech-savvy.

Just visit a service center of PAN service provider, UTIITSL or NSDL. Fill the form called 'Annexure-I' and submit it along with the photocopies of your Aadhaar and PAN cards. You must know that the manual method is not free of cost, and you would have to pay a nominal amount for linking PAN and Aadhaar.

What If There Is a Mismatch of Name in Aadhaar and PAN?

In case you have any mismatch of your name on your Aadhaar and PAN, you can easily get it rectified. For a minor mismatch such as the spelling of your name, you need to go to the e-filing website of the Income Tax department and click on the 'Link Aadhaar' button located on the left pane. Enter your details like your name (as per Aadhaar card), PAN, Aadhaar number and then click on ‘submit’. Make sure that you use the exact case of alphabets and avoid spelling mistakes.

If there is a major mismatch, where the name on Aadhaar doesn’t match with the one on the PAN card, then you will not be able to link PAN and Aadhaar. You must change your name either in Aadhaar or in PAN by visiting UTIITSL for Biometric Aadhaar authentication or NSDL e-Gov for PAN. You can find the list of PAN centers on the websites of UTIITSL and NSDL.