Linking Aadhaar and PAN is not mandatory for all.
It has now become mandatory for you to link your PAN with Aadhaar with effect from July 1, 2017, as per the income tax laws. However, the government has exempted certain class of individuals from linking these two documents subject to certain conditions.
Even before the Supreme Court Judgement was announced upholding the legality of section 139AA, the Central Board of Direct Taxes (CBDT) had, in its notification dated May 11, 2017 clarified the categories of individuals who are exempted from compulsorily linking their PAN with Aadhaar by exempting them from the purview of Section 139AA of the Income Tax Act.
CBDT has notified that Section 139AA of the Income Tax Act is not applicable to the following individuals:
(i) Those categorised as Non-resident Indians as per the Income Tax Laws
(ii) Not a citizen of India
(iii) Is of age 80 years or more at any time during the tax year
(iv) Residents of the states of Assam, Meghalaya and Jammu and Kashmir
The above mentioned categories of Individuals are exempted from the purview of section 139AA i.e. exempted from compulsory linking of PAN and Aadhaar, only if they do not possess Aadhaar or Aadhaar Enrolment ID.
The newly introduced section 139AA of the Income Tax Act states that every person who has been allotted PAN as on July 1, 2017 and who is eligible to obtain Aadhaar Number shall intimate the same to the tax authorities. The PAN of those who fail to do so will become invalid on a date to be notified later by the department.
The Aadhaar (Target Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 states that every resident shall be entitled to obtain Aadhaar number by submitting his demographic and biometric information by undergoing the process of enrolment. The Act has also defined the eligibility conditions for Aadhaar.
The CBDT, after the SC judgment on the matter, in its press release dated June 10, 2017 has clarified that every person, who possesses both PAN and Aadhaar/Aadhaar Enrolment ID, should intimate the same to the Income Tax department by linking these two as mandated by the tax laws. This requirement applies irrespective of whether the individuals file tax returns or not.
As per CBDT, the judgement has given partial relief to those who do not have Aadhaar and do not wish to obtain Aadhaar for the time being, that their PAN will not be cancelled so that other consequences under the Income Tax Act for failing to quote PAN may not arise.