PAN linking status for TDS deduction

An overview of PAN linking status for TDS deduction

In this post, we will discuss how to check Check PAN Aadhaar Link Status, the consequences of an inoperative PAN card, and the TDS deduction amount for an inoperative PAN. Let’s take a close look at each section in detail:

How to Check PAN- Aadhaar Link Status

To see if your PAN is linked with Aadhaar, follow the procedures below : 

1: Visit the Income Tax e-filing website.

2: Under the ‘Quick Links’ section, select the ‘Link Aadhaar Status’ option on the homepage.

3: Enter your PAN and Aadhaar card numbers, then select the ‘View Link Aadhaar Status’ option.

4: The screen will show the PAN-Aadhaar link status.

If the PAN is not linked to Aadhar, then it is as good as not having a PAN. Such PANs are called Inoperative PANs. If a PAN is Inoperative, one cannot use the PAN for financial transactions like investment, bank account opening, etc. (More cases are discussed below)

You can request to link your PAN with Aadhaar after paying the penalty if your PAN is inoperative. However, the PAN would take 30 days time to be operative again.

Consequences of when PAN is inoperative

If your PAN is inoperative, you have limited provisions/no access to certain financial operations, which include:

  1. Opening certain bank accounts (excluding time deposits and primary savings bank deposits) with a banking company or cooperative bank.
  2. Applying for credit and debit cards.
  3. Opening a securities demat account with a participant, depository, or custodian.
  4. Making cash payments of more than Rs.50,000 for various activities, including restaurant or hotel stays, foreign travel, foreign currency purchases, mutual fund investments, bond or debenture acquisitions, and bond payments to the Reserve Bank of India (RBI).
  5. Depositing more than Rs.50,000 in one day with a bank or cooperative bank.
  6. Make cash payments of more than Rs.50,000 in any one day for purchasing bank drafts, banker’s cheques, or pay orders from a banking business or cooperative bank.
  7. Opening time deposits exceeding Rs.50,000 or more than Rs.5 lakh within a fiscal year with a banking company, post office, cooperative bank, NBFC, or Nidhi registered under the Companies Act of 2013.
  8. Making cash, bank draft, pay order, or banker’s cheque payments to a banking firm, cooperative bank, or another institution or company totalling more than Rs.50,000 in a fiscal year for one or more prepaid payment instruments.
  9. Paying life insurance premiums exceeding Rs.50,000 in a financial year to an insurer.
  10. Selling or buying securities (apart from shares) for more than Rs. 1 lakh in a single transaction.
  11. Selling or purchasing more than Rs. 1 lakh worth of company shares that aren’t listed on any official stock exchange.

Non-financial implications of not linking PAN to Aadhar are as follows:

  • The taxpayer will not be able to file a return using the inoperative PAN
  • Pending returns will not be processed
  • Pending refunds cannot be issued to inoperative PANs
  • Pending proceedings, as in the case of defective returns, cannot be completed once the PAN is inoperative
  • Tax must be deducted at a higher rate as PAN becomes inoperative.
  • Taxpayers cannot submit 15G/15H declarations for nil TDS.

How much TDS is deducted if PAN is inoperative?

TDS (Tax Deducted at Source) will be deducted at 20% from the income, and any exemptions will not be considered for such deduction. This is twice the average rate applicable based on the tax slab. The higher rate deduction will continue until the PAN is made operative.

Once PAN status is operative, the tax deduction will continue at the normal rate. 

How to link PAN with Aadhar?

Individuals who have not linked their PAN with Aadhar can do so by paying a late penalty of Rs. 1000. First, they are required to pay the penalty and then link their PAN & Aadhar to the income tax website. However, they must ensure they have a valid PAN, Aadhaar number and mobile number to pay the penalty and link them.

To pay the penalty, follow the below steps:

1: Visit the Income Tax e-filing website.

2: Click the ‘e-Pay Tax’ option under the ‘Quick Links’ heading.

3:Enter the ‘PAN’ number under the ‘PAN/TAN’ and ‘Confirm PAN/TAN’ columns, enter the mobile number and click the ‘Continue’ button.

4: After OTP verification, it will be redirected to the e-Pay Tax page. Click the ‘Continue’ button.

5:  Click the ‘Proceed’ button under the ‘Income Tax’ tab.

6: Select Assessment Year as ‘2024-25’ and ‘Type of Payment (Minor Head)’ as ‘Other Receipts (500)’ and click the ‘Continue’ button.

7: The applicable amount will be pre-filled against the ‘Others’ option. Click the ‘Continue’ button and make the payment.

You can pay the late penalty on the Income Tax e-filing Portal through net banking, debit card, over-the-counter, NEFT/RTGS, or payment gateway options.

You can link your PAN with Aadhaar after four to five days of paying the penalty by following the steps below:

1: Go to the Income Tax e-filing portal.

2: Under the ‘Quick Links’ heading on the left-hand side of the homepage, click on the ‘Link Aadhaar’ option.

3: Enter the ‘PAN’ and ‘Aadhaar Number’ and click the ‘Validate’ button.

4: A pop-up message stating ‘Your payment details are verified’ will appear when the penalty payment has been verified. Click the ‘Continue’ button to submit the linking request.

5:Enter the required details and click the ‘Link Aadhaar’ button.

6: Verify the OTP received on the mobile number and submit.

7: The request to link the PAN-Aadhaar card will be successfully submitted.

For whom is Aadhaar-PAN linkage not compulsory?

The following individuals are exempt from linking Aadhaar-PAN linkage:

  • Residents of the states of Assam, Jammu and Kashmir, and Meghalaya;
  • non-residents as per the I-T Act, 1961;
  • persons aged 80 and above at any time during the previous year 
  • those who are not citizens of India.

We have concluded the post on PAN linking status for the TDS deduction. Please share your views and opinions with us in the comment section below.

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