The Central Board of Direct Taxes ( CBDT ) has notified norms to make Permanent Account Number ( PAN ) inoperative if it is not linked with Aadhaar.

The CBDT has amended the Income Tax Rules, 1962 for the fifth time and the amendment came to be known as Income Tax (5th Amendment) Rules, 2020. Further, the subject matter of this amendment pertains to the manner of making permanent account number inoperative.

Section 139AA of the Income Tax Act states that every person who has PAN as on July 1, 2017, is required to link his/her PAN with his/her Aadhaar number. If the PAN is not linked by Aadhaar by a date to be notified by the government then PAN would become invalid. This date has now been notified as September 30, 2019.

This amendment has come into enforcement as it is published under the Official Gazette of India.

Through this amendment manner of making Permanent Account Number (PAN) inoperative is prescribed. It is stated that the person who has been allotted the Permanent Account Number (PAN) on July 1, 2017, is required to intimate his aadhaar number in accordance with Section139 AA(2) before March 31, 2020.

If in case an individual fails to intimate his Permanent Account Number (PAN) with his Aadhar Number before March 31, 2020, then as a consequence the Permanent Account Number (PAN) of that individual will become inoperative immediately after March 31, 2020.

In case if the Permanent Account Number (PAN) of an individual becomes inoperative then it would be assumed that the individual has not furnished, intimate or quoted the Permanent Account Number (PAN) under the Act which he is supposed to do.

As per the prescribed persons under Sub-rule (1) initiates the process of intimating his Permanent Account Number (PAN) with the Aadhar number under Rule 139 AA(2) after March 31, 2020, then Permanent Account Number (PAN) shall become operative.

The Principal Director General of Income Tax or Director General are empowered to specify the formats and standard along with the procedure pertaining to the verification of the operational status of Permanent Account Number (PAN).

Recently, the Gujarat High Court held that the permanent account number (PAN) cannot be declared inoperative due to non-linking of Aadhaar or Aadhaar number. The Court Ordered that only for the reason that the permanent account number is not linked with Aadhaar or Aadhaar number is not quoted and the applicant shall not be subjected to the proviso to sub-section (2) of section 139AA of the Act till the judgment of the Supreme Court in the Rojer Mathew v. South Indian Bank Ltd. and others.