Here’s a detailed analysis of Section 139AA of the Income Tax Act, 1961, which mandates the quoting and linking of Aadhaar numbers with PAN for tax-related purposes:
1. Overview of Section 139AA
Introduced via the Finance Act, 2017, Section 139AA requires:
- Mandatory Aadhaar-PAN linkagefor eligible individuals.
- Quoting Aadhaarin PAN applications and income tax returns (ITRs).
- Objective: To curb tax evasion, eliminate duplicate PANs, and streamline tax administration.
Effective Date: July 1, 2017.
2. Key Provisions
(a) Who Must Quote Aadhaar?
- Resident individualseligible for Aadhaar under the Aadhaar Act, 2016.
- Exceptions:
- Non-residents (NRIs).
- Minors, persons with disabilities, and residents of Assam, Jammu & Kashmir, and Meghalaya.
(b) Where to Quote Aadhaar?
- PAN applications(new or corrections).
- Income tax returns (ITRs).
(c) Alternatives for Non-Aadhaar Holders
- Enrolment ID(28-digit number issued during Aadhaar enrollment).
3. Consequences of Non-Compliance
- PAN becomes inoperative: Invalid for financial transactions, ITR filing, and refunds.
- Penalties:
- ₹10,000 for default under Section 272B.
- Late fee of ₹500 (up to 3 months) or ₹1,000 (beyond 3 months) under Section 234H.
- Higher TDS/TCS: 20% deduction if PAN is inoperative.
4. Exemptions
- NRIs: Exempt unless they qualify as residents under the Aadhaar Act.
- Government-notified categories: Includes senior citizens (80+), non-citizens, and certain regions.
5. Recent Updates (2024–2025)
- Extended Deadline: PAN-Aadhaar linkage deadline for pre-October 2024 PANs is December 31, 2025.
- Auto-allotment of PAN: Aadhaar holders filing ITRs may get PAN auto-generated.
Summary Table
| ASPECT | REQUIREMENT | PENALTY FOR NON-COMPLIANCE |
| Quoting Aadhaar | Mandatory for residents in PAN applications and ITRs | PAN inoperative; ₹10,000 penalty |
| Linking Deadline | December 31, 2025 (for pre-October 2024 PANs) | Late fees up to ₹1,000 |
| Exemptions | NRIs, minors, specified regions | Not applicable |
