Personal Finance

Linking PAN And Aadhaar: Impact of Non-linking on Investments

Mutual Funds are a well-regulated investment product. There are rules and regulations for both Mutual Fund Companies and investors that they need to comply with. One such essential regulation is that all investors need to complete their KYC or Know Your Customer process before investing in any Mutual Fund scheme.

This KYC process is a mandatory legal process and ensures that the investments are made in a real person’s name and consequently helps in tax compliance. One of the most important documents used during this KYC process is your PAN. PAN is used during the KYC process because it is the number to which all your financial transactions need to be mapped.

So having a valid and operational PAN is needed for continued access to all financial services, including Mutual Funds. While in normal circumstances, once a PAN is issued, there is nothing else that needs to be done. However, the government had notified a new rule which you need to comply with by June 30th to keep your PAN card operative.

In this blog, we will explain all you need to know about linking PAN with Aadhaar. We will also give the step-by-step guide to check if you have already linked your Aadhaar with your PAN and complete the process of linking these two documents if you have not done it already.

Linking PAN With Aadhaar: The Final Deadline

The government in the Union Budget 2017 had introduced a law making it mandatory for every individual having a PAN to link with their Aadhaar number. Following various reasons, the government had to postpone the deadline to link Aadhaar and PAN several times in the past few years. The latest deadline is June 30, which is unlikely to be delayed further.

Impact On Your Investments If You Do Not Link PAN With Aadhaar

If your PAN is not linked with Aadhaar by June 30, your PAN shall be considered inoperative. Consequently, your KYC status in Mutual Funds will also get invalid. As a result of this change in status of your PAN, you will not be able to access your investments in Mutual Funds. Simply put, you will not be able to make fresh investments in Mutual Funds. Even your ongoing SIPs in Mutual Fund schemes can be stopped. And worse, you may not even be able to redeem your investments.

Not only Mutual funds, but you also may not be able to access investments in NPS, stocks, or any other investments where your PAN is used. In fact, banks can also prohibit you from any transactions and freeze your accounts. Recently, State Bank Of India (SBI), the country’s largest bank, warned its customers that failing to link their Aadhaar with PAN could cause “inconvenience in enjoying seamless banking service.” And many banks are likely to follow the suit.

NRIs Linking PAN With Aadhaar – Is It Mandatory?

There is some confusion among Non-resident Indians (NRIs) if they also need to link their PAN with Aadhaar. As per the government’s rules, NRIs must have a PAN card to be able to invest in Indian Mutual Funds.

However, it is not mandatory for NRIs to have an Aadhaar card. Only resident Indians are mandated to have an Aadhaar card. So if the Income Tax department knows that you are an NRI, you need not link your PAN and Aadhaar linkage. But if you are an NRI and your income-tax returns do not classify you as an NRI, your PAN card will become inoperative. So, it is better to err on the side of caution and update your NRI status with the Income Tax department.

How to Check If Your Aadhaar Is Linked With PAN

This requirement to link these two documents was announced a few years ago. So it is possible that you would have already linked your PAN and Aadhaar long ago. To be sure that you have linked both these documents, you can follow the following process:

Step 1 – Visit the new income tax portal, www.incometax.gov.in.

Step 2 – On the home page, scroll down to ‘Our services’ and click on ‘Link Aadhaar – Know Your Aadhaar-PAN Link Status’

Step 3 – Enter your PAN and Aadhaar numbers.

Step 4 – Click on ‘View Link Aadhaar Status,’ and it will show if you have linked these two documents.

PAN and Aadhaar Not Linked? Here is how you can do it

The entire process of linking these two documents is pretty simple and shouldn’t take more than a few minutes. Here are the steps you need to follow.

Step 1 – Visit the new income tax portal

Step 2 – On the home page, scroll down to ‘Our services’ and click on ‘Link Aadhaar.’ This will be the second option from the left.

Step 3 – Key in your PAN, Aadhaar, name as per Aadhaar and mobile number

Step 4 – If your Aadhaar has only your year of birth, there is a small box to tick at the bottom of the page.

Step 5 – Also click on another box that says “I agree to validate my Aadhaar details”

Step 6 – Click ‘Link Aadhaar’, and the process will be complete.

If you do not possess the Aadhaar number, the Enrolment ID of the Aadhaar form can be quoted to complete this process.

Conclusion

Linking your Aadhaar with PAN is crucial to continue your investments. In fact, it can have a bearing on all your financial transactions as well. So, if you have not linked both the documents, do not delay a process that will barely take 5 minutes.

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