The income tax department has made it compulsory to link your Permanent Account Number (PAN) with Aadhaar for simpler returns filing. One should check their PAN- Aadhaar link status and If your PAN and Aadhaar are not linked, the depository participant will suspend your demat account., it will have far-reaching implications for income tax purposes and individual investments. Therefore, all investors must link the two documents to ensure smooth and continual trade in the stock market. As a mutual fund investor, you will also face non-compliance hurdles if your PAN and Aadhaar are not linked.
Topics Covered :
- What Will Happen if PAN is Not Linked With an Aadhaar Card?
- NRIs Linking PAN With Aadhaar – Is It Mandatory?
- How to Check If Your Pan Link with Aadhar
- PAN and Aadhaar Not Linked? Here is How You Can do it
- Conclusion
What Will Happen if PAN is Not Linked With an Aadhaar Card?
Recently, the Indian government has made it compulsory for every individual to link PAN and Aadhaar, except NRIs, non-citizens, individuals above 80 years, and residents of J&K, Assam and Meghalaya. The step is to ensure that every taxpayer has a unique identity linked to their PAN that will eventually curb tax evasion. If you check PAN Aadhaar link status and find that they are not yet linked, you may face the following consequences:
ITR Filing
Filing an Income Tax Return (ITR) will become challenging, as it must include your Aadhaar card number. If your PAN and Aadhaar are not linked, the income tax department will reject your ITR, preventing you from filing the ITR and receiving a tax refund.
Government Services
Accessing certain government services might become difficult, including passport application, obtaining subsidies, opening a bank account, etc. Such services often require you to submit both cards. If they are not linked, utilising these services might become problematic.
New PAN Card
Obtaining a new or duplicate PAN card will become easier if it is linked to your Aadhaar card. In case your old PAN card gets damaged, lost, or stolen, getting a new one will become challenging. It is mandatory to include your Aadhaar number if you apply for a new PAN.
Penalty
Not linking PAN and Aadhaar might attract a penalty of up to ₹ 10,000 under the Income Tax Act.
TDS or TCS Rates
If your PAN and Aadhaar are not linked, the income tax department will deduct or collect your TDS or TCS at higher rates, and claiming a refund may also become difficult.
Mutual Fund Investment
When investing in mutual funds or the stock market, you must open Demat account with a custodian of securities, a depository participant, or another person with SEBI. If your PAN and Aadhaar card are not linked, you won’t be able to invest in mutual funds for more than ₹ 50,000.
Demat Account
If your PAN and Aadhaar are not linked, the depository participant will suspend your Demat account. After that, CDSL and stock exchanges will not accept any buy or sell orders when you trade or invest. NSE, MCX, and BSE will also block you from trading, and you can no longer buy or sell the securities. Moreover, you cannot square off your current positions. All your SIP investments will be automatically cancelled, delaying your financial objectives. Your MTFs (Margin-Traded Funds) will also be impacted, after which you cannot pledge or unpledge your shares in the Demat account.
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NRIs Linking PAN With Aadhaar – Is It Mandatory?
According to the income tax rules, every NRI must possess a PAN card to invest in Indian mutual funds. However, most NRIs need clarification if they also must link their PAN with Aadhaar. The truth is that NRIS don’t need to possess an Aadhaar card. An Aadhaar is a mandatory document for resident Indians only.
So, if you are a Non-Resident Indian, you don’t need to link your PAN with an Aadhaar card. However, if you live outside India, but your IT returns do not recognise you as an NRI, the income tax department may deactivate your PAN card. So, the first step is to update your NRI status with the income tax department.
How to Check If Your Pan Link with Aadhar
Linking your PAN with Aadhaar is not a new concept. The income tax department recommended this step a long ago. So, the chances are high that you must have already taken the necessary steps. If you don’t remember doing that, follow these steps to check PAN Aadhaar link status.
- Visit the new income tax portal at www.incometax.gov.in
- Scroll down to ‘Our services’.
- Click on ‘Link Aadhaar – Know Your Aadhaar-PAN Link Status’.
- Enter your PAN and Aadhaar details.
- Click on ‘View Link Aadhaar Status’.
- It will show if your documents are already linked or not.
PAN and Aadhaar Not Linked? Here is How You Can do it
If you check your PAN Aadhaar link status and find that it is not linked, you can link your PAN with Aadhaar by following these steps:
- Visit https://www.incometax.gov.in/iec/foportal/
- Select ‘Link Aadhaar Status’.
- Enter your PAN and Aadhaar details.
- Click on ‘Validate’.
- Click on ‘Continue to Pay Through E-Pay Tax’.
- Enter your PAN, reconfirm, and fill in your registered mobile number.
- Click on ‘Continue’.
- Enter a 6-digit OTP.
- Click on ‘Continue’.
- Select ‘Assessment Year’.
- Click on ‘Continue’.
- Select your payment method.
- Complete your payment and download the receipt.
- After 4-5 days, click on the ‘Link Aadhaar’ option.
- Enter OTP.
Conclusion
Linking your PAN and Aadhaar is crucial to continue trading in the stock market. Failing to do that can attract penalties and negatively affect your financial transactions. So, check your PAN Aadhaar link check status and link both documents if you still need to do it. The process barely takes a few minutes, after which you can freely trade through your Demat account.
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