The Central Board of Direct Taxes (“CBDT”) vide Notification No. 15/2023 dated March 28, 2023 has substituted Rule 114AAA to notify consequences that shall apply if a Permanent Account Number (“PAN”) becomes inoperative due to non-linking with Aadhaar. The consequences include no refund, no interest payable on refunds, and higher tax deductions/collections.
In the Income-tax Rules, 1962, for rule 114AAA, the following rule shall be substituted, namely: — “114AAA. Manner of making permanent account number inoperative.—
(1) Where a person, who has been allotted the permanent account number as on the 1st day of July, 2017 and is required to intimate his Aadhaar number under sub-section (2) of section 139AA, has failed to intimate the same on or before the 31st day of March, 2022, the permanent account number of such person shall become inoperative, and he shall be liable for payment of fee in accordance with sub-rule (5A) of rule 114.
(2) Where the person referred to in sub-rule (1) has intimated his Aadhaar number under sub-section (2) of section 139AA after the 31st day of March, 2022, after payment of fee in accordance with sub-rule (5A) of rule 114, his permanent account number shall become operative within thirty days from the date of intimation of Aadhaar number.
(3) A person, whose permanent account number has become inoperative, shall be liable for further consequences for the period commencing from the date as specified under sub-rule (4) till the date it becomes operative, namely:–
(i) refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made;
(ii) 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;
(iii) 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;
(iv) 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:
(4) The provisions of sub-rule (3) shall have effect from the date specified by the Board.
(5) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall specify the formats and standards along with the procedure for verifying the operational status of permanent account number under sub-rule (1) and sub-rule (2).”.
The Notification can be accessed at: https://egazette.nic.in/WriteReadData/2023/244726.pdf