Linking PAN with Aadhaar by May 31: Avoid Higher Tax Deduction

The Income Tax Department has issued a reminder to taxpayers: link your PAN with Aadhaar by May 31, 2024, in order to avoid tax deductions at a higher rate. Let’s dive into the details:

1. Why Link PAN with Aadhaar?
   • As per income tax rules, if your PAN is not linked with biometric Aadhaar, TDS (Tax Deducted at Source) is required to be deducted at double the applicable rate.
   • Last month, the income tax department clarified that no action will be taken for short deduction of TDS if the assessee links their PAN with Aadhaar by the specified deadline.
2. How to Link PAN-Aadhaar?
   • You can link your PAN with Aadhaar either online or offline:
     • Online Method: Visit the Income Tax e-filing portal and follow the steps to link your PAN and Aadhaar.
     • Offline Method: Visit the nearest Aadhaar Seva Kendra or PAN service center to complete the linking process.
3. Penalties for Non-Compliance:
   • Reporting entities, including banks and forex dealers, are also reminded to file SFT (Statement of Specified Financial Transactions) by May 31 to avoid penalties.
   • Delay in filing SFT returns may attract a penalty of up to ₹1,000 for each day of default.
   • Non-filing or filing inaccurate statements may also lead to additional penalties.
4. Why SFT Matters?
   • Through SFT, the income tax department keeps track of high-value transactions undertaken by individuals.
   • Reporting entities must furnish details of certain financial transactions or reportable accounts registered/maintained by them during the year.

Remember, timely compliance can save you from unnecessary tax deductions and penalties. So, link your PAN with Aadhaar before May 31, 2024, and stay on the right side of tax regulations.