Aadhaar PAN Linking – Provisions, Applicability & Impact on NRIs, Foreign Citizens Etc
In the Budget 2017, Govt of India has introduced a new section 139AA in the Income Tax Act, 1961.
This new provisions has made it mandatory for individuals to link their Aadhaar with Permanent Account Number (PAN).
Table of Contents
- Eligibility for Aadhaar Number Application
- How to Link Aadhaar and PAN
- Differences Between Aadhaar Records and PAN Records
- Importance, Benefits of linking Aadhaar with PAN
- Other Topics Wrt NRIs, OCIs, PIOs, Foreign Citizens – CA Services In India
- Frequently Asked Questions (FAQs) In Relation to Aadhaar linking with PAN
- Q: Is it mandatory for NRIs to link PAN with Aadhaar? What is the Aadhaar-PAN linking requirement in relation to NRIs?
- Q: Whether foreign citizens (PIO, Expatriate) are required to obtain Aadhaar and link it with PAN? Is it mandatory for Foreign Citizens to link Aadhaar with PAN?
- Q: Is it necessary to link PAN with Aadhaar even if there is not taxable income?
- Q: If once Aadhaar is linked with PAN, can it be delinked later on?
- Q: Whether a foreign citizen can apply for Aadhaar?
- Q: How can the Aadhaar be linked with PAN?
- Q: What is the process of Aadhaar Enrollment for NRIs?
- Every person, who is eligible to obtain Aadhaar number, shall quote Aadhaar in PAN Application as well Income Tax Return.
- Where a person does not possess the Aadhaar number he will quote Enrollment number of Aadhaar application in the PAN Application as well Income Tax Return (ITR) Form.
- Every person, having PAN, shall intimate Aadhaar number to prescribed authority on or before notified due date.
- Failure, to intimate PAN by notified date, shall make PAN inoperative.
Supreme Court Decision of 2018
Validity of section 139AA was questioned in the court. On the same, in September 2018, 5 Judged bench of Supreme Court pronounced the judgement and upheld the legal & constitutional validity of Section 139AA. Court said that rules, in relation to Aadhaar linking with PAN and quoting the same in Income Tax documents, are valid.
Eligibility for Aadhaar Number Application
- For the purposes of section 139AA, section applies to every person who is eligible to obtain Aadhaar. Hence, question arises who is eligible to obtain Aadhaar.
- As per Aadhaar Act 2016, every resident is eligible to obtain Aadhaar. Hence, Resident under Aadhaar Act is relevant for section 139AA. As per Aadhaar Act, for the purposes of resident, an individual shall be considered Resident if his stay in India is 182 days or more during a 12 months period preceding the Aadhaar Application date.
- Hence, as per Aadhaar Act, it is not material whether a person is Indian Citizen or Foreign Citizen. Also, it does not matter whether a person is NRI or not. A foreign citizen or NRI is eligible to obtain Aadhaar, if their stay in India is 182 or more in a 12 months period.
Budget 2019 – Easing of Norms For NRIs for Obtaining Aadhaar
In Budget 2019, the Finance Minister said that NRIs (having Indian Passport) can apply and obtain Aadhaar on arriving India, and they need not to wait for 182 days to be eligible for Aadhaar Application. Hence, NRIs, who have a valid Indian Passport, can apply for Aadhaar on arriving India without complying with 182 days stay requirement
139AA(3) – Exemption To Certain Class of People
As per section 139AA(3), Govt can notify any person or class of person from the Aadhaar-PAN linking. Accordingly, Govt has exercised this power and vide notification 37/2017 (May 2017) notified exemptions to following person from the provisions of section 139AA:
- Foreign Citizen
- Individual who is residing in the state of Assam, Jammu and Kashmir and Meghalaya.
- Individual who is a non-resident as per the Income-tax Act, 1961.
- An individual who is of the age of 80 years or more at any time during the previous year.
Exemption to above class of person is this that the requirement of quoting of Aadhaar / Enrolment ID shall not apply to these individuals if they do not possess the Aadhaar / Enrolment ID. Hence, if they possess the Aadhaar/Enrolment ID number, then it seems that the exemption may not apply.
This notification provides relief to various categories of people particularly Non-residents (ie NRIs) and Foreign Citizens (ie Expatriates, PIOs, OCIs etc) as there was a practically & logical challenge for them to apply Aadhaar number. Now, such individuals would be able to file their tax return/ obtain PAN in India without having Aadhaar.
Due Date of Linking of Aadhaar and PAN
Till now, there have been many extended dates notified by the Govt of India for linking of Aadhaar with PAN. However, because of various reasons (i.e. still many eligible person are facing difficulty in obtaining Aadhaar, mismatching of Aadhaar and PAN information etc) and to avoid hardship to common man, Govt of India has given many extensions for linking of Aadhaar with PAN. The new extended date for this linking is March 31, 2020 (Notification Dec 30, 2019).
Due to Coronavirus effect, on March 24, 2020, the Finance Minister Ms Sitharaman has extended the Aadhaar-PAN linking date from March 31, 2020 to June 30, 2020. On June 24, 2020, CBDT has further extended this date to March 31, 2021. Hence, now, the linking of PAN with Aadhaar can be done upto March 31, 2021.
How to Link Aadhaar and PAN
Linking of Aadhaar with PAN can be done either through income tax website ((www.incometaxindiaefiling.gov.in) or via SMS as per the process as under:
Online Linking without logging into Income Tax Account
- Go to income tax website (incometaxindiaefiling.gov.in).
- Click the Link Aadhaar button (left side of window)
- Enter & Submit the requisite details (ie PAN, Aadhaar Number, Name as per Aadhaar Card, Capcha Code).
- Now, linking will be completed after verification from UIDAI.
Online Linking by logging into Income Tax Account
- Login into income tax website (incometaxindiaefiling.gov.in). If not already registered, register yourself first.
- If pop up window appears, click there. Else, go to Profile Settings Section and link Aadhaar.
- Certain details will be automatically appear as per details submitted with Income Tax Portal. Verify the same with Aadhaar Card.
- If the details matches, enter balance information (Aadhaar number, captcha code etc) and submit for linking PAN with Aadhaar.
- Now, linking will be completed after verification from UIDAI.
Linking by sending SMS
- Now one can his/her Aadhaar with PAN through SMS as well.
- For this, send SMS to 56161 or 567678.
- SMS to be send in specified format ie:UIDPAN><12 digit Aadhaar><10 digit PAN. Eg: UIDPAN 123456789123 AKPLM2124M.
- SMS can be sent from registered mobile number only.
Differences Between Aadhaar Records and PAN Records
- After adopting process of linking of Aadhaar, linking is done after verification of data with UIDAI.
- If there are differences between Aadhaar and PAN data, then sometimes linking can happen if difference is very minor.
- If differences are not accepted by UIDAI, then person need to to get his/her details changed either in PAN records or Aadhaar records as the case may be.
Budget 2019 – Usage of Aadhaar In lieu of PAN – Interchangeability of Aadhaar-PAN
- In various transactions where furnishing of PAN is mandatory (Section 139A), if they have linked their PAN with Aadhaar, they can quote Aadhaar in lieu of PAN.
- Those who do not have PAN, on quoting Aadhaar in specified transactions where PAN is required, will be allotted PAN by Income Tax Deptt on the basis of Aadhaar number..
- There are various transactions where Aadhaar can be conveniently used in lieu of PAN i.e. opening a new bank account, deduction & deposition of TDS on property purchase (26QB), deduction & deposit of TDS on rent payment (26QC), Form 15G/15H to avoid TDS by senior citizens.
- ITR can be filed by using Aadhaar number (if PAN is not yet taken). Those, who file ITR with Aadhaar number, will be allotted PAN by tax authorities on the basis of Aadhaar number.
Budget 2020 Proposals In Relation To Aadhaar – February 2020
- Instant PAN Allotment – A system will be launched shortly to allot PAN instantly online on the basis of Aadhaar. Hence those, who are holding Aadhaar, can get the PAN instantly online. There will not be requirement of submitting detailed form in this case. Hence, PAN will be very quick and convenient for Aadhaar holders.
- Less Rate of TDS – E-commerce operators are allowed to deduct TDS on all payments participants @1% rate with PAN/Aadhaar instead of 5% in non-PAN/Aadhaar cases.
What If PAN is not Linked with Aadhaar
- Initially, when the section 139AA was introduced, on non-compliance of provisions, income tax section provided for invalidating of PAN.
- Now, an amendment has been done in the section. ‘Invalid’ is replaced with ‘Inoperative’.
- Hence now, once the deadline to link PAN and Aadhaar is over, the income tax department will start treating all unlinked PAN cards as “inoperative” ones. This means that the person, who has not linked his PAN-Aadhaar, he will not be able to use it. Also, that person will also not be able to file income tax returns (ITR) where PAN is mandatory.
- Deletion of Additional PAN: linking of Aadhaar and PAN will verify the correct PAN with Income Tax records of Govt of India. And the other PAN, which is mistakenly issued to that person, shall get deleted from Income Tax records. Also
- Tax Evasion Deterrence: PAN and Aadhaar linking will help Govt to keep track on taxable transactions incurred by that person. This will prevent tax evasion by the person who is doing various financial transactions attracting tax.
- Usage of Multiple PAN: Aadhaar PAN linking will stop usage of multiple PAN by any person to avoid transactions recording with Govt of India.
- E-verification of ITR: Once Aadhaar is linked with PAN, e-verification of ITR (after submission of ITR) can be easily done by opting Aadhaar OTP option. This facilitates expeditious processing of income tax refund also.
Gujarat High Court Judgement – PAN Cannot Be Inoperative If Not Linked With Aadhaar – January 2020
In a recent judgement (BANDISH SAURABH SOPARKAR Vs UNION OF INDIA), Gujarat High Court decided that:
- PAN shall not be declared as Inoperative if PAN is not linked with Aadhaar Number.
- Court said that provisions of section 139AA(2) of Income Tax Act will not be applied till the time Supreme Court judgement is pending in relation to Rojer Mathew v. South Indian Bank Ltd. and others.
- In the case of Rojer Mathew, where matter is that whether Aadhaar Act was rightly introduced as Money Bill, the Supreme Court has referred to matter to a larger bench.
- Hence, if the constitution validity of Aadhaar Act is not very clear till the time Supreme Court larger bench decides on it, provisions of section 139AA will also not get a finality. Hence, the Gujarat HC has decided that PAN cannot be declared or considered as inoperative till the time Supreme Court decides on Aadhaar Act validity.
Other Topics Wrt NRIs, OCIs, PIOs, Foreign Citizens – CA Services In India
- Non-Resident Indian – Income Tax & FEMA
- CA Services To NRIs, OCIs, PIOs, Foreign Citizens
- Income Tax Return ServicesFor NRIs, PIOs, Foreign Citizens
- Income Tax Exemptions, Deductions, Reliefs – Applicable To Non-Residents (NRIs, Foreign Citizens)
- Property Sale, Capital Gain Tax Implication, Exemption, Tax Planning Advisory Services
- TDS Exemption or Lower Rate TDS Services For NRIs, PIOs, Others (Form 13)
- Remittance/Repatriation of Money From NRO Account to NRE/Foreign Account (Form 15CA, 15CB)
- Seafarer/Mariner Taxation Services In India
- NRIs, Foreign Citizens Property Buying Tax & FEMA Advisory Services
- Property Sale, Acquisition and Management Services for NRIs, PIOs, Foreign Citizens
- Recently Migrated NRIs – Needful Actions To Be Taken By NRIs – Tax, RBI Regulations etc
- Indian Budget 2019 – Impact On NRIs, Foreign Citizens
- Budget 2020 – New Amended Rules For Determination of NRI, PIO Residential Status In India
- Frequent Financial Transactions Which Form Part of Non-Resident ITR In India (NRI, PIO)
- What Are The Benefits To Non-Resident Indians, Foreign Citizens For Filing ITR Filing in India
- Income Tax Penal Provisions For Late Filing or Not Filing ITR in India
- What Are The Consequences Of Or Non-Filing of ITR in India
Disclaimer: Though the information provided here is prepared by qualified and well experienced professionals, however, we hereby advise the readers to seek a professional advise (as per the facts of matter and changes in laws) before acting on it’s information.
NRIs are Indian citizens (holding Indian passports) who are working & living abroad. There are two levels of laws, which applies on Non-Resident Indians (NRIs), ie as under:
- As per section 139AA, the section applies on any person who is eligible to obtain Aadhaar. Now, as per the Aadhaar Act provisions, to be eligible for Aadhaar, one need to stay in India for 182 days or more during preceding 12 months. Hence, if an NRI is not staying in India for 182 days or more during a period of 12 months period then that NRI will not be eligible for Aadhaar application. Hence, that NRI will not be liable for compliance of section 139AA also.
- Secondly, as per the notification 37/2017 of Govt of India [as per the powers given to Govt under section 139AA(3)], exemption has been provided to NRIs who do not possess Aadhaar number. Hence, to the extent a person is Non-Resident as per the Income Tax Act, he is exempt under this notification.
Similarly, above provisions also apply to Foreign Citizens (ie Expatriates, Person of Indian Origin ‘PIO’, Overseas Citizens of India ‘OCI’ etc).
No, if they donot have Aadhaar, they can file ITR or apply PAN without Aadhaar number. For more detailed answer please refer above FAQ.
Yes. As per section 139AA, every person have to intimate (ie linking) to the Income Tax Authority by the due date. Else, PAN will be inoperative.
Q: Whether a foreign citizen can apply for Aadhaar?
Aadhaar can be linked with PAN by three ways i.e. By SMS (to 56161 or 567678), by login into Income Tax Website (www.www.incometaxindiaefiling.gov.in), and by without login into income tax website. Detailed process is mentioned above in this article.
Q: What is the process of Aadhaar Enrollment for NRIs?
As per UIDAI guidelines, NRIs need to following process for Aadhaar enrollment
- Visit nearby Aadhaar Centre along with Passport.
- Submit details in the Enrolment form (with active email id).
- Submit declaration at the specified place.
- Request the agent to enroll you as an NRI.
- Provide Passport copy as identity proof.
- Provide document for address & date of birth.
- Do biometric process.
- Check all the details on the operator screen for its correctness.
- Take acknowledgement slip
- Status of Aadhaar can be checked on the website uidai.gov.in
Usefulness Of Above Information – Aadhaar-PAN linking
Above information can be helpful to all individuals, companies employing expatriates, NRIs living & working abroad, Foreign citizens residing in India and Abroad etc. Some of the usefulness of above is towards:
- Understanding of Aadhaar-PAN linking process.
- Applicability of Aadhaar-PAN linking for NRI, Foreign Citizen (OCI, PIO, Expatriates etc)
- Interchangeability of Aadhaar with PAN
- Impact of Aadhaar not linking with PAN
- Process of Aadhaar linking with PAN
- Exemption From Aadhaar-PAN linking
- Provisions of Section 139AA