What Are PAN-Related Notifications by CBDT in India?

The Central Board of Direct Taxes (CBDT) periodically issues notifications regarding PAN (Permanent Account Number) to enhance transparency, improve compliance, and streamline income tax administration. These notifications affect PAN issuance, usage, linking, and penalties for non-compliance.

• PAN-Aadhaar Linking Mandate

• CBDT has made it mandatory to link PAN with Aadhaar under Section 139AA of the Income Tax Act.

• The deadline for PAN-Aadhaar linking has been extended multiple times, with penalties for delay.

• PANs not linked to Aadhaar by the deadline are declared inoperative for income tax use.

• Inoperative PANs cannot be used for filing returns, refund claims, or TDS credits.

• Penalties for Non-Compliance Under Section 272B

• CBDT mandates a ₹10,000 penalty for failure to quote PAN or quoting an incorrect PAN.

• This applies in ITR forms, TDS filings, Form 15G/H, and high-value transactions.

• Deductors and institutions that misquote PAN may also face reporting penalties.

• Automated scrutiny now flags mismatched or missing PAN in compliance filings.

• PAN Use in Specified Financial Transactions

• CBDT issues periodic updates under Rule 114B listing transactions where PAN is mandatory.

• These include property purchases above ₹10 lakh, fixed deposits over ₹50,000, and cash payments over ₹2 lakh.

• Notifications ensure better tracking of tax evasion and unexplained income.

• Institutions must now verify PAN against the Income Tax database before processing such transactions.

• PAN for Non-Residents and Foreign Investors

• CBDT clarified that NRIs and foreign investors need to apply for PAN only if they earn taxable income in India.

• Rule 114AAB provides exemptions for certain Category I FPIs and eligible foreign funds.

• Even exempt entities must quote Form 60 or provide declaration when PAN is not required.

• Clarifications were issued to reduce the burden on global investors complying with DTAA.

• Digital Initiatives and PAN Services

• CBDT enabled instant e-PAN allotment through Aadhaar eKYC for individuals.

• PAN applications are fully digitized via NSDL and UTIITSL portals.

• The e-Filing portal integrates PAN validation for all services, including Form 26AS, AIS, and ITR.

• PAN-based compliance portals allow users to track notices, e-proceedings, and refund status.