PAN vs Aadhaar for Investors
You are cooking your favourite dish. While you have put in all the right ingredients, the taste depends heavily on how you put in two crucial things - salt and spices. Missing either of them can ruin the flavour. In the world of investment, PAN and Aadhaar serve a similar purpose. Missing either of them can be a big roadblock in your investment journey.
What are the Aadhar Card and PAN Card?
Aadhar card and PAN card are just more than documents for investors. While the former is issued by the Unique Identification Authority of India (UIDAI), the latter is issued by the Income Tax Department. These two documents help you, as an investor, complete a vital process in investing: Know Your Customer (KYC).
KYC aims to establish an investor’s identity and prevent financial crimes. If you are willing to invest in stocks or mutual funds in India, you must complete KYC under the Prevention of Money Laundering Act (PMLA). Completing your KYC is vital to getting started on your investment journey. Once you complete your KYC, you can invest in any stock(s) and mutual fund(s) in India.
PAN Card vs Aadhaar Card: The Differences
Just like you need to know the difference between salt and spice while cooking, you must understand how PAN and Aadhaar differ from each other. The table captures the key differences between the Aadhar card and the PAN card on various aspects:
| Aspect | Aadhaar Card | PAN Card |
|---|---|---|
Issued By | UIDAI | Income Tax Department |
Format | 12-digit numeric number | 10-digit alphanumeric number |
Serves As | Identity and address proof | Identity proof recording all financial transactions |
Linking PAN and Aadhaar
While it is vital to have a PAN card and an Aadhaar card, it is equally essential to link PAN with Aadhaar. If your PAN is not linked with Aadhaar, it becomes inoperative. The consequences of an inoperative PAN are as follows:
- You cannot file your income tax returns and claim refunds
- TCS and TDS will be deducted at higher rates
- TCS/TDS will not appear on Form 26AS
- Failure of systematic investment plans (SIPs)
- Blocking of share trades
Time and again, the government has extended the deadline to link PAN with Aadhaar. The deadline is 31st December 2025, failing which can make your PAN inoperative. To activate an inoperative PAN, you need to pay a penalty of ₹1,000.
How to Link PAN and Aadhaar?
You can easily link your Aadhar card and PAN card in a few simple steps. To link:
- Visit the official Income Tax Portal
- Click on ‘Link Aadhaar’
- Enter your PAN number, Aadhaar number, and click on ‘Validate’
- Enter the OTP received on your registered mobile number to link
Ensure the name, date of birth, and mobile number match your PAN and Aadhaar. Once the linking is successful, save the screenshot as a reference.
Conclusion
As an investor, having PAN and Aadhaar is a must. It results in a smooth investing experience. Also, link your PAN with Aadhaar to ensure your investments do not hit a roadblock.
This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.
Investments in securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed SEBI prescribed limit. The securities are quoted as an example and not as a recommendation. SEBI Registration No-INZ000200137 Member Id NSE-08081; BSE-673; MSE-1024, MCX-56285, NCDEX-1262.
