- Date : 08/08/2023
- Read: 3 mins
An inoperative PAN card allows specific financial transactions but attracts a higher TDS and TCS. Know about the transactions that you can do with such a card.
The government has made PAN and Aadhaar Card linking mandatory for various financial transactions. After continued extensions were given for linking the PAN with Aadhaar, the final deadline of 30th June 2023 has passed. If you have not linked your PAN card to your Aadhaar card, it will now become inoperative. An inoperative PAN card is a hindrance to basic financial transactions. However, there are some transactions that you can still do with an inoperative card. That being said, such allowed transactions are liable for higher TDS (Tax Deducted at Source) and TCS (Tax Collected at Source). Read on.
- Not linking PAN card to an Aadhaar card by 30th June 2023 would have made the PAN card inoperative.
- You will not be allowed to conduct certain transactions which require mandatory Aadhaar-PAN linking
- However, specified money transactions would be allowed even on an inoperative card
- Higher TDS and TCS rates would apply to the allowed transactions with an inoperative PAN card
PAN-Aadhaar linking is important because it allows you to –
- Invest in mutual fund schemes
- Open a fixed deposit account
- File income tax returns
- Claim a refund on excess income tax paid, etc.
An inoperative PAN card is challenging in managing your finances. Moreover, the higher TDS and TCS rates erode your income. For instance, if your interest income from bank fixed deposits exceeds ₹40,000 (₹50,000 if you are a senior citizen), TDS is applicable at 10% if a PAN card is provided and active; and 20% if it is not provided or inactive. Since an inoperative PAN card means an invalid card, the TDS rate is 20%.
However, if you don’t mind the higher TDS and TCS rates, there are some transactions that are allowed on an inoperative PAN card. Let’s have a look –
Transactions Attracting a Higher TDS
- Interest income earned from bank fixed and recurring deposits which exceed ₹40,000 (₹50,000 if you are a senior citizen)
- Dividend income received from companies or mutual fund schemes in excess of ₹5000 in a financial year
- The sale of immovable property whose stamp duty value is higher than ₹50 lakhs
- Buying a car valued at more than ₹10 lakhs
- Making partial withdrawals from the EPF (Employees’ Provident Fund) Account which is more than ₹50,000 and which attracts a TDS
- Paying rent in excess of ₹50,000 per month to the landlord
- Selling goods or services valued at ₹50 lakhs or above
- Paying for contract work where the value of the payment is more than ₹30,000 for one contract or ₹1 lakh for multiple contracts
- Commission or brokerage received which are more than ₹15,000
Transactions Attracting a Higher TCS
- Making foreign remittances under the Liberalised Remittance Scheme (LRS) wherein the value of the remittance is more than ₹7 lakhs. However, remittances for education and medical purposes are excluded.
- An overseas trip worth more than ₹7 lakhs
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The Bottom Line
So, know the effects of an inoperative PAN and the transactions that you can do to manage your finances effectively.
Also Read – Know all about Aadhaar – PAN linking