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Consequences of inoperative PAN as per the newly substituted rule 114AAA

 

         Consequences of inoperative PAN as per the newly substituted rule 114AAA

Background:

An amendment was made to the income tax Act by inserting the section 139AA regarding quoting of Aadhar as follows:

 Section 139AA: Every person who is eligible to obtain Aadhaar number shall, on or after the 1st day of July, 2017, quote Aadhaar number—

  (i) in the application form for allotment of permanent account number;

 (ii) in the return of income:

Provided that where the person does not possess the Aadhaar Number, the Enrolment ID of Aadhaar application form issued to him at the time of enrolment shall be quoted in the application for permanent account number or, as the case may be, in the return of income furnished by him.

(2) Every person who has been allotted permanent account number as on the 1st day of July, 2017, and who is eligible to obtain Aadhaar number, shall intimate his Aadhaar number to such authority in such form and manner as may be prescribed, on or before a date to be notified by the Central Government in the Official Gazette:

Provided that in case of failure to intimate the Aadhaar number, the permanent account number allotted to the person shall be made inoperative after the date so notified in such manner as may be prescribed

Further Rule 114AAA was inserted to specifying the due date of intimation of Aadhar and consequences in case of failure to do so which can be read as:

Rule 114AAA: Where a person  is required to intimate his Aadhaar number under 139AA, has failed to intimate the same on or before the 31st day of March, 2022, the PAN of such person shall become inoperative, and he shall be liable for payment of fee in accordance with rule 114(5A).

A person, whose permanent account number has become inoperative, shall be liable for further consequences for the period commencing from the date as specified ( by the board) till the date it becomes operative, namely:-

  • refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made;
  • interest shall not be payable on such refund for the period, beginning with the date specified under sub-rule (4) and ending with the date on which it becomes operative;
  • where tax is deductible under Chapter XVIIB in case of such person, such tax shall be deducted at higher rate, in accordance with provisions of section 206AA;
  • where tax is collectible at source under Chapter XVII-BB in case of such person, such tax shall be collected at higher rate, in accordance with provisions of section 206CC

The date mentioned in Rule 114AAA was extended by CBDT through Circular No. 07 dated 30th March, 2022 to to 31.03.2023.

 

Now CBDT has issued a circular no. 15 dated 28.03.2023 to clarify that  consequences specified in 114AAA  shall take effect from 1st July, 2023 and continue till the PAN becomes
operative. A fee of one thousand rupees will continue to apply to make the PAN operative by intimating the Aadhaar number.

 Read the Circular no. 15/2023

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