The last date to link PAN with Aadhaar is March 31, 2022. If an individual does not link his/her PAN with his/her Aadhaar number by this date, then the penalty for linking it after April 1, 2022, will have a two-tier structure.

As per a notification issued by the Central Board of Direct Taxes (CBDT) on March 29, 2022, Rs 500 will be charged if the PAN-Aadhaar is linked within three months after the expiry of the deadline. This would mean that if PAN-Aadhaar is linked between April 1, 2022, and June 30, 2022, then the individual will be liable to pay Rs 500 as a penalty for linking the same. If the linking of PAN-Aadhaar is done after three months, then a penalty of Rs 1,000 will be charged.

As per the notification issued: In exercise of the powers conferred by sections 139AA and 234H read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. Short title and commencement:

(1) These rules may be called the Income-tax (Third Amendment) Rules, 2022.

(2) They shall come into force from the 1st day of April, 2022.

2. In the Income-tax Rules, 1962 (hereinafter referred to as principal rules), in rule 114, after sub-rule 5, the following sub-rule shall be inserted, namely: -

"(5A) Every person who, in accordance with the provisions of sub-section (2) of section 139AA, is required to intimate his Aadhaar number to the prescribed authority in the prescribed form and manner, fails to do so by the date referred to in the said sub-section, shall, at the time of subsequent intimation of his Aadhaar number to the prescribed authority, be liable to pay, by way of fee, an amount equal to, -

(a) five hundred rupees, in a case where such intimation is made within three months from the date referred to in sub-section (2) of section 139AA; and

(b) one thousand rupees, in all other cases."

The rule for levying a penalty on not linking PAN-Aadhaar by the due date (currently March 31, 2022) was introduced as an amendment in Finance Act, 2021. Section 234H was introduced in the Income-tax Act, 1961 for levying of penalty for not linking PAN with Aadhaar after the due date. Previously, there was no law on the penalty charged if the two documents were not linked by the due date.

Though the law mentioned that the penalty for not linking PAN with Aadhaar will not exceed Rs 1,000, the exact amount was not specified. The latest notification issued by the Income-tax department specifies the penalty that will be charged for linking PAN with Aadhaar after the expiry of the deadline.

What will happen if PAN-Aadhaar is not linked?

As per the press release issued by the CBDT, "In order to mitigate the inconvenience to the taxpayers, as per Notification No.17/2022 dated 29th March 2022, a window of opportunity has been provided to the taxpayers upto 31st of March, 2023 to intimate their Aadhaar to the prescribed authority for Aadhaar-PAN linking without facing repercussions. As a result, taxpayers will be required to pay a fee of Rs. 500 up to three months from 1st April 2022 and a fee of Rs.1000 after that, while intimating their Aadhaar."

Thus, your PAN will remain operative till March 31, 2023, and an unlinked PAN-Aadhaar can be linked by paying the penalty amount.

Do note that the income tax department can also levy a penalty under section 272B for up to Rs 10,000 for not having an active PAN.

How to link PAN with Aadhaar?

The Income-tax department offers various ways to link PAN with Aadhaar. These include on the income tax e-filing portal, SMS and manually by visiting NSDL/UTIIL offices.