The PAN number supports the tax department to recognise the person or company in a particular transaction. At present, under Section 139AA (2), PAN number of any citizen will be considered as 'invalid' if he/she fails to link it to the Aadhaar number.
Invalid PAN means it will be considered as if you never had a PAN. Whereas, inoperative means you may not be able to use your PAN for any financial transactions till the time you link it to your Aadhaar. Though, the government has not clarified the meaning of inoperative yet officially.
Central Board of Direct Taxes (CBDT ) notified this deadline of September 30 to link PAN with Aadhaar on March 31, 2019. The PAN-Aadhaar linking rules changed when Finance Minister Nirmala Sitharaman presented the budget on July 2019. The latest rules have been mentioned under the new Income tax law proposed in the Finance Bill 2019.
As per the Finance Bill, "It is proposed to amend the said proviso so as provide that if a person fails to intimate the Aadhaar number, the permanent account number allotted to such person shall be made inoperative after the notified date in the manner as may be provided by rules. This amendment will take effect from 1st September 2019."
The authorities say, there is no transparency on what will happen if the PAN Card and Aadhar Card are not linked within the specified time. Once your PAN card becomes inoperative, it will be considered as if you never had a PAN card. You will not be able to carry out any financial transactions where PAN number is compulsory.
How to Link PAN and Aadhaar
To link these two identity cards, PAN and Aadhaar, you need to go to the Income Tax department's e-filing website. Under the Aadhaar linking tab, using your 12-digit Aadhaar number and 10-digit PAN number, you can complete the linking process.