When do I need a PAN or a TAN, and what happens if PAN and Aadhaar are not linked?

PAN

• Who: anyone with taxable income, every business, and anyone entering specified transactions (bank deposits above limits, property purchases, investments).
• How: an individual with Aadhaar can get an instant e-PAN free on the e-filing portal. Others apply in Form 49A (now Form 93) or Form 49AA (foreign citizens and entities) through Protean or UTIITSL.
• Companies and LLPs get their PAN with incorporation.
• One PAN only: holding two can attract a penalty of ₹10,000 (section 272B, now section 467). Surrender the extra one.

TAN

• Who: anyone required to deduct or collect tax: employers, businesses paying contractors or professionals, and so on.
• Not needed by individuals and HUFs who deduct only on purchase of property, rent, or payments to contractors and professionals under the special provisions; they use their PAN in Form 141.
• How: Form 49B (now Form 135), online. Companies get it with incorporation.
• Not having a TAN when required can attract a penalty of ₹10,000 (section 272BB, now section 468).

Linking PAN with Aadhaar

Individuals who have Aadhaar must link it with their PAN. The deadline was 30 June 2023, and PANs not linked became inoperative.

Effects of an inoperative PAN:

• no refund is issued, and no interest is paid on refunds for that period;
• TDS and TCS are deducted at higher rates, generally 20%; and
• the PAN cannot be used for transactions that require it.

To fix it: pay the fee of ₹1,000 on the e-filing portal, then submit the linking request. The PAN becomes operative, usually within 30 days.

Exempt from linking: residents of Assam, Meghalaya and Jammu and Kashmir; non-residents; people aged 80 or more; and those who are not citizens of India.

Check your status

Use Link Aadhaar Status on the e-filing portal, and make sure the name and date of birth match in both, or the linking will fail.