The Central Board of Direct Taxes (CBDT) has made it mandatory for all taxpayers to link their Aadhaar and Permanent account number (PAN) before March 31 (end of the day).
As a result, all financial institutions, including banks, mutual fund house and others have released messages as a reminder to their customers about the last date to link the two numbers.
‘If your Aadhaar is not linked then your PAN will be considered inoperative and this will have an impact on the TDS rate at the time of receiving any policy payouts’ insurance companies have informed policyholders.
As per the new directives, if the two documents are not linked then the TDS rate on taxable payout will be 20 per cent as per Section 206 of the Income Tax Act 1961, effective from April 1.
Here are some details of the latest directives:
1. PAN if not linked with Aadhaar by March 31, 2021 shall remain inoperative till such period, it is linked. Inoperative PAN means TDS will be deducted at higher rates, ITR cannot be filed and a penalty of Rs 10,000 may be imposed. As per rule, 114AAA, if a person’s PAN gets inoperative, then it will be deemed as that individual does not have a furnished PAN.
2. March 31 is important as it is the last date to file/revise ITR for FY 2019-20. It is also the last date of investments for deduction u/s 80C or 80D, etc. for FY 2020-21 and last date to file Q1 & Q2 TDS Returns of FY 2020-21 without late fee.
3. From July 1, TDS at 0.1 per cent will have to be paid on purchases of more than Rs 50 lakh if turnover in financial year 2020-21 exceeds Rs 10 crore under Section 194Q.
4. Charitable Institutions/Trusts already registered with the Income Tax Department will have to re-register themselves in 2021-22.
5. Income Tax Audit will not be required for FY 2020-21 for persons having turnover up to Rs 10 crore if cash component does not exceed 5 per cent of total Receipts/Payments.
6. As payments received or made by cheque other than account payee cheques will be counted as a cash component.
Also, the ITR of FY 2020-21 cannot be filed after December 31, 2021 which implies that three months less time is available as March 31 used to be the cut off date.