Non-resident Indians are demanding a waiver or extension of the deadline to link their unique national ID Aadhaar card and the PAN (permanent account number) card issued by the income tax department.
The income tax department has announced that failure to link the cards will attract a fine of INR1,000 (£9.91, $13.63, €11.61) and the PAN card will become invalid for financial transactions after the deadline of 31 March 2021.
The linking, aimed to make financial transactions transparent and to nab tax evaders, was stipulated in the Finance Bill 2021 passed in parliament early this week.
It is mandatory for every person to quote the Aadhaar number in their income tax return and the application for the allotment of PAN, provided they are eligible for Aadhaar.
The government has, in the past, given several extensions to link the cards.
But now, as per the Finance Bill, 2021, it has introduced an amendment under which a person will be liable to pay a late fee of up to INR1,000 in case of non-linking of PAN with Aadhaar.
Invalid PAN card
As per section 234H, added to the Income Tax Act 1961 under the Finance Bill 2021, it is necessary to link the PAN card to Aadhar on or before the deadline provided by the government.
If not linked, the PAN card will become invalid and cannot be used for financial transactions after the due date.
If the PAN card is rendered invalid, it will affect a variety of financial services such as opening bank accounts, demat accounts for NRIs to invest in the Indian markets, all types of banking services and investing in mutual funds.
In case a person is required to furnish or intimate his PAN and the PAN is inoperative, it will be deemed that he or she has not furnished their number.
Under various provisions of the Income Tax Act, if a person does not furnish their PAN or gives an inoperative PAN he or she may have to a pay a higher TDS (tax deducted at source) or TCS (tax collected at source), and may not be able to file income tax return and may face the consequences of not filing the tax return.
Extension unlikely
Though the deadline to link the cards is unlikely to be extended beyond the deadline, NRIs hope the authorities will budge.
“It is highly unlikely that the deadline will be extended as the budget proposals are scheduled to be effective from April 1, 2021 as linking of the cards is one of the budget proposals,” said KV Shamsudheen, chairman of Pravasi Bandhu Charitable Trust, an NGO espousing NRI issues, who spearheaded a campaign to make NRI eligible for Aadhaar card issuance.
“However, exemptions can be made, in this case, in view of the inability of several NRIs to link the cards who are unaware of the deadline and the implications.”
Earlier, NRIs were ineligible for Aadhaar card as it was issued to resident Indians only.
A resident Indian is defined as one who stayed in India continuously for more than 182 days in a year. If an NRI stayed in the country for more than 182 days, his NRI status will become invalid.
Later this period was reduced to 120 days in the 2020-21 budget. However, the government later decided that NRIs can also be issued the national ID card.
But a majority of NRIs did not bother to get the card as it was not mandatory.
Similarly, many NRIs did not apply for the PAN card for the fear of being included in India’s tax net. Every person who has been allotted PAN as of 1 July 2017 and who is eligible to obtain Aadhaar number is required to link his PAN to Aadhaar.
The linking can be done online. https://www.incometaxindiaefiling.gov.in/home
PAN can be linked to Aadhaar through SMS services also. Send SMS to 567678 or 56161 from the registered mobile number.
