Aadhaar was developed to provide a single source identity verification system across the country for the residents. It empowers residents of India with a unique identity and a digital platform to authenticate anytime, anywhere.
Linking Aadhaar with the PAN database allows Revenue authorities a robust way of de-duplication, as Aadhaar number is based on biometric attributes of fingerprints and iris images. Seeding of Aadhaar into the PAN database allows the taxman to weed out any undetected duplicate PANs and facilitate resolution where one PAN is allotted to multiple persons. There are strict regulations for individuals holding multiple PANs, like a penalty of Rs 10,000 may be levied on such individuals. This move is also expected to streamline income tax administration in line with the government's focus on countering tax evasion.Further, the central government's move for linking Aadhaar with UAN is aimed at collecting data of workers (including migrant workers) for its national database of unorganized workers.
Due to the second wave of the novel coronavirus pandemic, the deadline for linking Aadhaar with UAN and PAN is extended by the authorities to 1 September 2021 and 30 September 2021, respectively.
Linking of Aadhaar with PAN
As per the provisions of the Income-tax Act ('ITA'), every person must quote Aadhaar number in their application for the allotment of PAN from 1 July 2017. Also, every person who had been allotted PAN as of 1 July 2017, and has received the Aadhaar number, must intimate the number to the tax authorities by linking PAN and Aadhaar.
How to check if your Aadhaar is linked with PAN
Visit the Income Tax e-Filing website and click on the 'Link Aadhaar Status' option under quick links, enter PAN and Aadhaar Number; and click on 'View Link Aadhaar Status'.
Steps for linking Aadhaar with PAN:
Through the Income Tax e-Filing website
Visit the Income Tax e-Filing website and click on the 'Link Aadhaar' under quick links; Enter all mandatory details and select boxes as applicable and click on 'Link Aadhaar', and enter OTP and click on 'Validate'.
Linking Aadhaar via SMS
Send an SMS to 567678 or 56161 from your Aadhaar-registered mobile number in the following format:
UIDPAN
Implications of non-linking Aadhaar with PAN
As per the provisions of the ITA, non-linking of Aadhaar with PAN will not only make the PAN inoperative but may also attract a maximum penalty of up to Rs 1,000. PAN is required for carrying out several financial transactions. Using/quoting a non-operative PAN is equivalent to not having a PAN.
Employers withholding taxes and reporting the same are also advised to verify the Aadhaar linking status. Where the PAN is inoperative, the employer may need to deduct taxes at a minimum rate of 20 per cent, which could impact the cash flows for certain employees from a tax pay-out perspective. Further, the employer could face a challenge in filing the quarterly tax withholding returns, in a situation wherein PAN becomes in-operative.
Linking of Aadhaar with UAN
The Employees Provident Fund Organization ('EPFO') has mandated the linking of Aadhaar and UAN. As announced by the EPFO, PF return filed by the employers (ie, Electronic Challan-cum-Return (ECR)) will be allowed to be filed, for those members whose Aadhaar is seeded and verified with UAN. Hence, unless Aadhaar is linked and verified against the employee's PF account, the employer would not be able to credit PF contribution to the employee's PF account.
General issues faced while linking Aadhaar with UAN: Some employees are likely to face issues while seeding their Aadhaar due to mismatch in names, spelling, or date of birth, thereby posing a challenge. While the EPFO portal allows some flexibility to make rectifications, the process will not be easy if Aadhaar information is erroneous. Modifying the Aadhaar data can also be challenging, particularly when there are restrictions on movements in many states currently.
Steps | Through EPFO e-KYC portal | Using UMANG app | Through EPF account |
1 | Visit EPFO e-KYC Portal and click on 'Link UAN Aadhaar' at the bottom | Download and login to UMANG App and select 'EPFO' from 'All Services' | Visit EPFO Portal and login using your UAN and password |
2 | Enter UAN and mobile number to generate OTP and enter all mandatory details | Select 'Aadhaar Seeding' from 'e-KYC services' | Under the “Manage” tab, click on the KYC option |
3 | Enter “Captcha” and click on the “Submit” button for linking | Enter UAN and OTP generated | Select “Aadhaar” option and enter the details |
4 | Enter Aadhaar and new OTP generated to complete the linking | Once verified, Aadhaar will be linked with EPF account |
Implications of non-linking Aadhaar with UAN
As per the circular issued by EPFO, since the ECRs will not be generated for those members whose Aadhaar is not seeded with UAN, this could lead to employers being unable to remit the funds to the PF/pension account till the linking is completed. This may have implications ranging from non-compliance to levy of interest/damages.
Employers need to take advantage of the extended deadline to make sure that suitable communication is sent to the employees – advising them of the consequences of non-linking and providing them with guidance on how the linking can be completed.
Given the harsh implications of non-linking of Aadhaar with PAN and UAN and simple steps which can be followed to link the same, it is recommended for all the PAN and UAN holders to check their status and get it linked at the earliest, availing the advantage of the extended deadline. Also, the organizations must reach out to their employees on a war-footing, asking them to link their Aadhaar with UAN and PAN.
The author is Partner, Deloitte India
DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organization directly or indirectly.
