Quoting of Aadhaar Number [Section 139AA]

Quoting of Aadhaar Number [Section 139AA]

Section 139AA was introduced in the Income Tax Act, 1961, with effect from July 1, 2017, to make it mandatory for individuals to quote their Aadhaar number for various purposes related to income tax. The primary objectives of this section are to:

  • Enhance taxpayer compliance and curb tax evasion by linking Aadhaar with PAN (Permanent Account Number), a unique identification number assigned to taxpayers in India.
  • Streamline the administration of income tax by facilitating easy verification of taxpayer identity and linking it with various financial transactions.

Key Provisions of Section 139AA:

  1. Mandate to Quote Aadhaar: Every individual eligible to obtain an Aadhaar number is required to quote their Aadhaar number in the following situations:
  • Application for PAN: When applying for a new PAN or making changes to an existing PAN.
  • Income Tax Return (ITR) Filing: While filing ITR for any assessment year.
  1. Enrolment ID for Non-Aadhaar Holders: Individuals who do not possess an Aadhaar number can quote their Enrolment ID, a temporary identification number issued during the Aadhaar enrolment process, in place of the Aadhaar number.
  2. Consequences of Non-Compliance: Failure to quote or authenticate the Aadhaar number as per Section 139AA may result in the following consequences:
  • Invalidation of PAN: The PAN of the non-complying individual may be deemed invalid.
  • Penalty: A penalty of Rs. 10,000 may be imposed for each instance of non-compliance.

Exceptions to Section 139AA:

  1. Non-Resident Individuals: Individuals who are not residents of India are not required to quote their Aadhaar number.
  2. Exempt Persons: Certain categories of individuals, such as minors and persons with disabilities, may be exempt from quoting their Aadhaar number.
  3. Government Notification: The Central Government may, through a notification in the Official Gazette, specify any person or class of persons to whom the provisions of Section 139AA shall not apply.
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1.  Eligible Person to Quote Aadhaar Number [Section 139AA (1)]

Section 139AA(1) states that every person who is eligible to obtain an Aadhaar number shall, on or after the 1st day of July, 2017, quote Aadhaar number in the return of income furnished under sub-section (1) of section 139 or in the application for allotment of a permanent account number under sub-section (1) of section 139A.

In simpler terms, this means that any individual who is eligible to obtain an Aadhaar number is required to quote their Aadhaar number in the following situations:

  • When filing an Income Tax Return (ITR) for any assessment year.
  • When applying for a new PAN or making changes to an existing PAN.

To be eligible to obtain an Aadhaar number, an individual must be a resident of India. This means that the individual must be residing in India for at least 182 days during the preceding financial year.

Exceptions to quoting Aadhaar number

Yes, there are a few exceptions to the requirement to quote an Aadhaar number under Section 139AA(1). These exceptions include:

  • Non-resident individuals: Individuals who are not residents of India are not required to quote their Aadhaar number.
  • Minors: Minors below the age of 18 are not required to quote their Aadhaar number.
  • Persons with disabilities: Individuals who have been granted an exemption from quoting their Aadhaar number by the Central Government are not required to do so.
  • Individuals who are exempt from obtaining an Aadhaar number under the Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act, 2016, or any other applicable law, are also not required to quote their Aadhaar number under Section 139AA.

2.  Eligible Person to Intimate Aadhaar Number [Section 139AA (2)]

Section 139AA (2) of the Income Tax Act, 1961, mandates that every person who has been allotted a Permanent Account Number (PAN) as on July 1, 2017, and is eligible to obtain an Aadhaar number, shall intimate their Aadhaar number to the Income Tax Department. This means that individuals who had already been assigned a PAN before July 1, 2017, are also required to link their Aadhaar with PAN. This requirement applies to both Indian citizens and foreign citizens residing in India.

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Eligible Persons to Intimate Aadhaar Number:

  • Individuals who have been allotted a PAN as of July 1, 2017: This includes individuals who had already received a PAN prior to July 1, 2017, as well as those who obtained a PAN after that date.
  • Individuals who are eligible to obtain an Aadhaar number: This includes Indian citizens and foreign citizens residing in India. Minors and individuals with disabilities who are exempt from obtaining an Aadhaar number are not required to intimate their Aadhaar under Section 139AA (2).

Exceptions to the Intimation Requirement:

  • Non-resident individuals: Individuals who are not residents of India for tax purposes are not required to intimate their Aadhaar number under Section 139AA (2).
  • Individuals who have already intimated their Aadhaar number: If an individual has already linked their Aadhaar with PAN in the past, they are not required to intimate their Aadhaar number again.

Consequences of Non-Compliance:

Failure to intimate the Aadhaar number as required under Section 139AA (2) may result in the following consequences:

  • Invalidation of PAN: The PAN of the non-complying individual may be deemed invalid, which could hinder their ability to participate in various financial and tax-related transactions.
  • Penalty: A penalty of Rs. 10,000 may be imposed for each instance of non-compliance.

Method of Intimation:

The Aadhaar number can be intimated to the Income Tax Department through various methods, including:

  • Filing of Income Tax Return (ITR): Individuals can intimate their Aadhaar number while filing their ITR for any assessment year.
  • Online Intimation: Aadhaar can be linked with PAN through the e-filing portal of the Income Tax Department.
  • Linking Aadhaar through PAN Service Providers: Individuals can visit authorized PAN service providers to link their Aadhaar with PAN.
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Importance of Aadhaar Intimation:

Intimating Aadhaar under Section 139AA is crucial for several reasons:

  • PAN Validation: Linking Aadhaar with PAN helps to verify taxpayer identity and prevent misuse of PAN.
  • Tax Compliance: Aadhaar-linked PAN facilitates easier verification of taxpayer information and promotes tax compliance.
  • Financial Inclusion: Aadhaar-linked PAN supports financial inclusion by enabling individuals to access financial services more seamlessly.

3.  Provisions not to apply to certain Persons or a State [Section 139AA (3)]

Section 139AA (3) of the Income Tax Act, 1961, provides an exemption from the mandatory quoting of Aadhaar or Enrolment ID for certain individuals or classes of individuals, or for any State or part of any State. This exemption is granted by the Central Government through notifications published in the Official Gazette.

The exemption under Section 139AA (3) is intended to cover situations where there may be valid reasons for individuals or groups to be excused from Aadhaar linking. These reasons may include:

  • Difficulties in obtaining Aadhaar: In some remote or inaccessible areas, it may be challenging for individuals to enroll for Aadhaar or obtain their Aadhaar numbers.
  • Concerns about privacy and data security: Some individuals may have concerns about the privacy implications of linking their Aadhaar with their income tax records.
  • Religious or other beliefs: Individuals may have religious or other beliefs that prevent them from obtaining or using Aadhaar.

The Central Government has issued several notifications under Section 139AA (3) exempting certain categories of individuals from the mandatory Aadhaar linking requirement. These exemptions include:

  • Non-resident Indians (NRIs)
  • Persons with disabilities
  • Minors below the age of 18 years
  • Residents of Assam, Jammu and Kashmir, and Meghalaya

If you fall into any of these exempted categories, you are not required to link your Aadhaar or Enrolment ID with your PAN or income tax filings.

4. Fee for default relating to intimation to Aadhaar Number [Section 234H]

Section 234H of the Income Tax Act, 1961, imposes a fee on individuals who fail to link their Aadhaar number with their Permanent Account Number (PAN) within the prescribed timeframe. The fee amount varies depending on the delay:

If you fail to link your Aadhaar with your PAN by the due date, you will be liable to pay the applicable fee. The fee can be paid online through the Income Tax Department’s e-filing website.

Here’s a summary of the fee structure:

Delay Fee
Up to three months Rs. 500
After three months Rs. 1,000

Please note that the fee is in addition to any other consequences of not linking Aadhaar with PAN, such as PAN becoming inoperative.

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