According to current laws, you are required to link your PAN to your Aadhaar number. Furthermore, you must provide your Aadhaar number when filing your income tax return (ITR), applying for a new PAN, and receiving government benefits such as pension, scholarship, LPG subsidy, and so on.
With initial effect in 2017, the government had mandated that taxpayers link their current Aadhaar numbers with PAN cards. Since then, the Central Board of Direct Taxes (CBDT) has frequently delayed the PAN-Aadhaar connecting date. Individuals who have not yet linked the two ID documents can still do it by March 31, 2023, as of today in 2023. If not, their PAN will stop functioning as of April 1, 2023.
The deadline to link PAN and Aadhaar was initially set for March 31, 2022, however it is extended for an additional fee of Rs. 500 till June 30, 2022. The fine would then increase to Rs 1,000 after that. As a result, there are presently very few chances for additional extensions, that is, extensions without paying penalties. As a result, it is recommended that you link your PAN and Aadhaar as soon as possible, ideally by March 31, 2023.
The government has issued numerous reminders on the deadline for linking Permanent Account Numbers (PAN) with Aadhaar. however, tax experts think that there are slim prospects for any further extension.
According to one such Expert, Neeraj Agarwala, Director of Nangia Andersen LLP, stated that while PAN is used for numerous transactions, such as opening a bank account, buying real estate, or serving as identification, an inactive PAN will have a domino effect and people who have not linked their Aadhaar may encounter numerous difficulties. "Once your PAN becomes inactive, the person will be restricted from doing financial transactions where quoting of PAN is mandatory like mutual funds, subjected to TDS at higher rates and penalty under section 272B", said Agarwala.