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NPS subscribers need to link PAN with their Aadhaar by March 31, if not, face restrictions on transactions

Retirement

The deadline for linking Permanent Account Number (PAN) with Aadhaar is nearing. The Income Tax provisions have made it mandatory for every taxpayer to link PAN with Aadhaar and the latest due date is March 31, 2023. This is very important for subscribers of the National Pension System (NPS). As per the latest guidelines from provident funds and pension regulator, PFRDA, NPS subscribers must ensure that their PAN is linked with Aadhaar or they will face certain restrictions in their transactions from April 1st, 2023.

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In a statement on March 23rd, PFRDA said, “since PAN is the one of the key identification number and part of Know Your Customer (KYC) requirements for NPS accounts, all concerned intermediaries are required to ensure valid KYC for all the subscribers.”

Currently, the provisions of the Income Tax Act, make it mandatory for every person who has been allotted a PAN to intimate his/her Aadhaar Number to the prescribed authority so that the Aadhaar and PAN can be linked.

This is needed to be done on or before the notified date, failing which the PAN shall become inoperative.

As per the latest circular of CBDT, the PAN allotted to a person shall become inoperative if it is not linked with Aadhaar by March 31, 2023, and shall be liable to all the consequences under the Income-tax Act, 1961 for not furnishing, intimating, or quoting the PAN.

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Hence, PFRDA said, “all existing subscribers are also required to ensure linking of their PAN with Aadhaar number prior to March 31, 2023, for continual and smooth transactions and to avoid consequences of non-compliance with the said CBDT circular, as such NPS accounts would be considered non-KYC compliant, and there could be restrictions on NPS transactions until the PAN and Aadhaar are linked.”

NPS is administered and regulated by PFRDA. NPS is seen as the world’s lowest-cost pension scheme. Subscribers can choose their own investment options and pension fund and see their money grow.

The procedure to open an NPS account is easy as all an applicant has to do is to open an account with any one of the POPs being run through all Head Posts Offices across India and get a Permanent Retirement Account Number(PRAN). Subscribers are allowed to choose their investment options and pension fund and see their money grow.

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Also, NPS offers a host of tax benefits. Any individual who is a subscriber of NPS can claim tax exemptions under 80 CCD (1) within the overall ceiling of ₹1.5 lakh under Sec 80 CCE. Furthermore, an additional tax benefit for investments up to ₹50,000 in NPS ((Tier I account) is available exclusively to subscribers under subsection 80CCD (1B). This is over and above the deduction of Rs. 1.5 lakh available under section 80C of the Income Tax Act. 1961.

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