You'll be fined Rs. 10,000, if you give wrong PAN
You need to be extra careful while filling your Permanent Account Number (PAN), as even a minor error in spelling out the ten-digit alphanumeric identity could cost you as much as Rs. 10,000. Under Section 272B of the Income Tax Act 1961, the Income Tax department may impose a penalty of Rs. 10,000 if anyone is found to have given an incorrect PAN number.
Where is the provision applicable?
The said provision would be applicable when you are filing your Income Tax return (ITR), or in other situations where quoting of PAN is necessary. Notably, PAN is necessarily required for carrying out various financial transactions such as fixed/cash deposits above Rs. 50,000, selling/purchasing immovable property worth more than Rs. 10 lakh, applying for debit/credit cards, opening demat account, acquiring shares/debentures, among other acts.
Don't have PAN? You can use these two documents instead
If/until you don't have a PAN, you may instead quote your Aadhaar number as the government recently announced that PAN and Aadhaar can now be used interchangeably However, the Rs. 10,000 penalty rule is also applicable for giving out a wrong Aadhaar number in lieu of PAN. Separately, you can also fill up Form 60 and use it as a replacement for PAN.
Meanwhile, it is illegal to hold multiple PAN cards
On a related note, it is against the law to hold more than one PAN card. Under Section 272B of the Income Tax Act, a penalty of Rs. 10,000 might be levied, if a person is found holding two or more PAN cards. Note: In case you have two PAN cards, it is advisable to surrender one of them to the Income Tax department.
Further, please note that it is mandatory to link your PAN with Aadhaar. December 31, 2019 is the last date to carry out the linkage. Earlier, this deadline was September 30. Now, if a taxpayer fails to meet the new deadline, their PAN would be rendered "inoperative". Following is the procedure to link the two documents online and via SMS.
To link PAN with Aadhaar online, log on to the Income Tax e-portal. Next, under the 'Quick Links' section, click on 'Link Aadhaar.' Enter details such as Aadhaar number, PAN, name, and captcha code. Submit the details, click on 'Link Aadhaar', and you're done. After successful verification from UIDAI, linkage will be confirmed. Notably, you can also link the two documents via SMS service.
To link your PAN and Aadhaar via SMS mode, type a text message in this format: UIDPAN (space) 12-digit Aadhaar number (space) 10-digit PAN, and send to 567678 or 56161 from your Aadhaar-registered mobile number.