The Securities and Exchange Board of India (SEBI) has issued a directive requiring all investors to connect their PAN (Permanent Account Number) with their Aadhaar card before June 30. Failure to comply with this requirement will result in the inability to engage in trading activities within the securities market. Earlier, the Central Board of Direct Taxes (CBDT) had extended the deadline from March 31 to June 30.
As per a circular from the CBDT, the PAN assigned to individuals will be rendered inactive if it is not linked with Aadhaar by March 2023. This inactivity will lead to the individual facing legal consequences under the provisions of the Income Tax Act of 1961 for failing to furnish, intimate, or quote the necessary details.
Non-compliance with the PAN-Aadhaar linkage requirement will not only affect investors in the securities market but also pose obstacles for mutual fund investors.
Mutual fund investors who fail to link their PAN with Aadhaar will face restrictions on all financial and non-financial transactions, including systematic triggers. Income distribution cum capital withdrawal (IDCW) reinvestments, payouts, and fixed maturity plan (FMP) payouts will be categorized as unclaimed.
Investors experiencing issues with their folios will be unable to lodge complaints with asset management companies (AMCs) until their PAN is updated. Moreover, due to the unavailability of PAN, Form 15G/H submissions will not be accepted, potentially resulting in a higher 20% deduction of tax deducted at source (TDS). Additionally, brokerage payments for investors with invalid Know Your Customer (KYC) records will be withheld.
To resolve these concerns, mutual fund investors have the option to update and change their PAN, provided it is already linked to Aadhaar.
The process of linking PAN with Aadhaar can be carried out as follows:
Step 1: Visit the income tax Portal (https://eportal.incometax.gov.in).
Step 2: Click on the “Link Aadhaar” tab.
Step 3: Enter the PAN and Aadhaar details and click on “validate.”
Step 4: On the following page, re-enter the PAN details along with the mobile number.
Step 5: Validate the process by entering the One-Time Password (OTP) received from UIDAI (Unique Identification Authority of India) and proceed to pay any applicable penalties.
Step 6: After payment of the penalty, the PAN will be successfully linked to Aadhaar.
Ensuring prompt compliance with the PAN-Aadhaar linkage requirement is crucial for mutual fund investors to avoid disruptions in their transactions and maintain a smooth investment experience.
