If you are a fixed deposit investor who has failed to link your PAN with your Aadhaar and now your PAN is inoperative, you will not be allowed to submit Form 15 G/H against your fixed deposit and it will attract a TDS of 20 per cent instead of 10 per cent.According to the HDFC Bank website, “If PAN is not linked with Aadhaar, such PAN will become inoperative w.e.f. 1st July 2023 and the customer will not be allowed to submit Form 15 G/H and higher TDS deduction will be applicable for inoperative PANs.”For fixed deposits, if you earn an interest of more than Rs 40,000 (Rs 50,000 for senior citizens) in a financial year, you will be liable for TDS on your FD investments.
PAN becomes inoperative if you haven’t linked with Aadhaar by June 30, 2023
The deadline for linking PAN with Aadhaar was June 30, 2023. For individuals who have not linked these two, their PAN card will become inoperative from July 1, 2023.
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According to the rules of the Income-tax Act, 1961 (the ‘Act’), everyone who has been assigned a PAN as of July 1, 2017, and is entitled to receive an Aadhaar Number is required to notify the prescribed authority on or before June 30, 2023, on payment of a prescribed fee.What are the implications of booking an FD without PAN?
In the absence of PAN, the following are the implications for customers:
1) TDS will be recovered at 20 per cent (as against 10 per cent).
2) No TDS credit from the Income Tax department.
3) No TDS certificate will be issued (As per CBDT circular no:03/11)
4) Form 15G/H and other exemption certificates will be invalid and penal TDS will apply.
However, the PAN can be made operative again in 30 days, upon intimation of Aadhaar to the prescribed authority after payment of a fee of Rs 1,000.
Here’s what happens if you don’t link your Aadhaar-PAN by June 30, 2023:
Once the PAN becomes inoperative and the consequences during the period will be:
a) No refund shall be made against such PANs;
b) Interest shall not be payable on such refund for the period during which PAN remains inoperative; and
c) TDS/ TCS deduction will attract a higher rate applicable to PAN not present.
Further, you will not be able to do many banking services such as:
i)Book a Fixed Deposit above Rs. 50,000
ii)Deposit cash above Rs. 50,000.
iii)Get a new Debit/Credit Card
iv) Invest or redeem your Mutual Funds.
v)Purchase any foreign currency beyond Rs. 50,000.