More than 115 million PAN cards have been rendered inactive due to the failure to meet the Aadhaar-linking deadline,

The process of linking Aadhaar with PAN cards is now automated for new PAN card applicants during the initial application phase. It is obligatory for individuals who received their PAN on or before July 1, 2017, to link their PAN with Aadhaar.

According to a response to a Right to Information (RTI) query, Section 139AA(2) of the Income Tax Act mandates that individuals who were assigned a PAN on or before July 1, 2017, must inform the tax authorities of their Aadhaar number. Failure to do so by the specified date renders the PAN inoperative.

Moreover, Section 234H stipulates that individuals failing to link their PAN with Aadhaar by the notified date will incur a penalty. The Central Board of Direct Taxes (CBDT) has imposed a penalty of ₹1,000 to reactivate a PAN card that has become inactive.

This penalty of ten times the cost of obtaining a new PAN card, which is ₹91 excluding Goods and Services Tax, has raised concerns. Many individuals are questioning the fairness of such a substantial fine for reactivating a PAN card and are concerned about how they will file their income tax returns if their PAN becomes inactive. Mr. Gaur expressed the need for the government to reconsider and extend the time limits for linking PAN with Aadhaar, ideally for at least one year.

The consequences of not linking PAN and Aadhaar by the specified date were outlined by the CBDT in a circular dated March 30, 2022. It had also extended the deadline for linking Aadhaar and PAN to June 2023 at that time.