April 26,2023

How to Link Aadhaar with Pan to File Income Tax Returns (ITR)

As the world becomes increasingly digitised and interconnected, governments and businesses leverage technology to streamline processes and improve efficiency. In India, one such initiative is the Aadhaar program, a biometric identification system that assigns a unique 12-digit number to each citizen. The program has been noted as a major step towards reducing fraud and corruption, and improving government service delivery.
In 2017, the Indian government announced that linking aadhaar with the pan card (Permanent Account Number), a unique identifier assigned to taxpayers in the country, will become mandatory for filing income tax returns. The move aimed to reduce tax evasion and ensure that individuals could be easily identified and tracked across multiple financial transactions.
While the decision was met with some resistance, the process of linking Aadhaar with PAN is actually quite simple. All that is required is for individuals to log onto the Income Tax Department’s e-filing website, enter their PAN and Aadhaar numbers, and follow simple steps to complete the linking process.
However, despite the ease of the process, many individuals remain unaware of the requirement to link their Aadhaar and PAN numbers, and may face penalties or fines if they fail to do so. This underscores the importance of staying up-to-date on regulatory changes and requirements, and taking proactive steps to comply with them.
This blog will discuss linking Aadhaar with PAN to file income tax returns.

What are Aadhaar and PAN?

Aadhaar is a unique 12-digit identification number issued to Indian residents by the Unique Identification Authority of India (UIDAI). It is one of the most important identity proofs in India and is required for various purposes, such as opening a bank account, getting a new SIM card, and so on.
PAN, on the other hand, stands for Permanent Account Number. It is a 10-digit alphanumeric number issued to individuals and entities who pay taxes in India. It is a mandatory requirement for anyone who wants to file income tax returns.

Why is it important to link Aadhaar with PAN?

The government of India has made it necessary to link Aadhaar with PAN to file income tax returns easily. This prevents tax evasion and ensures taxpayers pay their fair share of taxes. When Aadhaar is linked with PAN, it becomes easier for the government to track and identify individuals evading taxes. It also helps reduce the incidence of multiple PAN cards, a common problem in India.

How to link Aadhaar with PAN?

There are two methods to link aadhaar with pan card – online and offline.

Online method:

  1. Step 1: Visit the Income Tax website – www.incometaxindiaefiling.gov.in.
  2. Step 2: Click on the button ‘Link Aadhaar’ right below the ‘Quick Links’ section on the left-hand side of the screen.
  3. Step 3: Enter your PAN number, Aadhaar number, and name as per Aadhaar.
  4. Step 4: If your Aadhaar card has only your year of birth mentioned, tick the box stating “I have only year of birth in Aadhaar card” to proceed.
  5. Step 5: Enter the Captcha code and click the ‘Link Aadhaar’ button.
  6. Step 6: A pop-up message stating that your Aadhaar has successfully linked to your PAN.

Offline method:

  1. Step 1: Visit your nearest Aadhaar enrollment centre or PAN service centre.
  2. Step 2: Fill in the required form for linking Aadhaar with PAN.
  3. Step 3: Submit the form with a copy of your Aadhaar and PAN cards.
  4. Step 4: Your details will be verified and the linking process completed.
The government has extended the deadline to link Aadhaar with PAN several times due to the COVID-19 pandemic. However, linking the two as soon as possible is advisable to avoid any future hassles.

Benefits of linking Aadhaar with PAN

Apart from making it mandatory to file income tax returns, linking Aadhaar with PAN offers several benefits, such as:
  • Seamless processing of income tax returns: When Aadhaar is linked with PAN, the processing of income tax returns becomes faster and smoother.
  • Opting for government subsidies: Linking Aadhaar with PAN is also necessary to opt for various government subsidies, such as LPG subsidy, scholarships, and so on.
  • Opening a bank account: Most banks in India now require customers to link their Aadhaar with their bank account for KYC (Know Your Customer) purposes.
  • Buying India Life Insurance Companies policies: Linking Aadhaar with PAN is also necessary for buying India Life Insurance Companies policies.

What are the consequences of not linking Aadhaar with PAN?

The government of India has mandated linking Aadhaar with PAN to file income tax returns. Failure to link aadhaar with pan card can result in the following consequences:
  • The taxpayer may not be able to file their income tax returns.
  • The taxpayer may have to pay the penalty for non-compliance.
  • The taxpayer may be unable to avail of various government subsidies, such as LPG subsidies, scholarships, etc.
  • The taxpayer may face difficulties opening a bank account, buying India Life Insurance Companies policies, etc.

Common issues faced while linking Aadhaar with PAN

While linking Aadhaar with PAN is a simple process, taxpayers may face some common issues that can cause delays or errors.
  • Mismatched name and date of birth between Aadhaar and PAN can cause linking errors.
  • Incorrect Aadhaar or PAN number can also cause errors while linking.
  • Technical glitches while linking Aadhaar with PAN online can cause delays or errors.
  • Name spelling or abbreviation differences between Aadhaar and PAN may also cause errors.
  • In case of any issues, taxpayers can seek assistance from the Income Tax Department or visit the nearest Aadhaar enrolment or PAN service centre for resolution.

Conclusion

Linking Aadhaar with PAN is mandatory for all Indian taxpayers who earn an income above a certain threshold. It is an important step towards preventing tax evasion and ensuring taxpayers pay their fair share of taxes. There are only two ways to link Aadhaar with PAN – online and offline. The online method is the most convenient and one can do it from home, while the offline method requires visiting the nearest Aadhaar enrolment centre or PAN service centre.
Apart from making it mandatory to file income tax returns, linking Aadhaar with PAN offers several benefits, such as seamless processing of income tax returns, availing government subsidies, opening a bank account, and buying India Life Insurance Companies policies.

Disclaimer

The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.

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