Linking Aadhaar And PAN Is Not Mandatory For All

Every person, who possesses both PAN and Aadhaar/Aadhaar Enrolment ID, should intimate the same to the Income Tax department.


A major step was taken by Central Board of Direct Taxes (CBDT). 

Aadhar is a 12 digit unique identification number issued to all Indian residents based on their biometric and demographic data. The data is collected by the Unique Identification Authority of India (UIDAI), whereas Permanent Account Number (PAN) is a code that acts as an identification for Indian nationals, especially those who pay Income Tax. It is a unique, 10-character alphanumeric identifier, issued to all judicial entities identifiable under the Indian Income Tax Act, 1961. As per the income tax laws, it was compulsory to link the Aadhar card with the PAN card with effect from July 1, 2017.

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The Central Board of Direct Taxes (CBDT) had notified on May 11, 2017, about the categories of the mandatory individuals for linking their PAN with Aadhaar by exempting them from the purview of Section 139AA of the Income Tax Act. However, the government has made free a certain class of people for not linking their documents.

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Central Board of Direct Taxes has notified that under the Section 139AA of the Income Tax Act are not applicable to the following individuals:
(i) Those categorized as Non-resident Indians as per the Income Tax Laws
(ii) An individual who is not a citizen of India
(iii) Person of the age 80 years or more at any time during the tax year
(iv) Residents of the states of Assam, Meghalaya and Jammu and Kashmir.

The above-mentioned categories of individuals are free from the compulsion of linking of PAN and Aadhaar, only if they do not possess Aadhaar or Aadhaar Enrolment ID.

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The section 139AA of the Income-tax Act states that very person who has been allotted PAN as on July 1, 2017,and who is eligible to obtain Aadhaar Number shall intimate the same to the tax authorities. The PAN of those who fail to do so will become invalid on a date to be notified later by the department.

The Aadhaar (Target Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 states that every resident has the right to obtain his/her Aadhaar number by submitting his/her demographic and biometric information, by undergoing the process of enrollment. The Act has also defined the eligibility conditions for Aadhaar.

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After the judgment of Apex Court on this matter,  the Central Board of Direct Taxes on June 10, 2017, had a press release which has clarified that every person, who owns both PAN and Aadhaar/Aadhaar Enrolment ID, should intimate the same to the Income Tax department by linking these two as mandated by the tax laws. By this step, the Central Board of Direct Taxes will know whether the individual has filed the tax return or not.

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As per Central Board of Direct Taxes, the judgment has given limited relief to those who do not have Aadhaar and do not wish to obtain Aadhaar for the time being, but their PAN will not be canceled so that other consequences under the Income Tax Act for failing to quote PAN may not arise.