New Delhi: Mutual Fund (MF) investors may not be able to make fresh investments and even redemptions from their existing MF investments if their Permanent Account Number (PAN) becomes invalid after June 30, 2021. As per the regulatory guidelines, PAN-Aadhaar linking will become mandatory for carrying out any MF transactions from July 1, 2021. Without linking with the Aadhaar number, the PAN of a person will be invalid.
According to a survey done by Registrar and Transfer Agent (RTA) Computer Age Management Services (CAMS), some of the PANs furnished by MF investors are invalid as per the Income Tax database.
Worth mentioning here is that as per market regulator Sebi’s guidelines, the PAN status of an investor must be ’valid’ in order to carry out the following transactions:
Investors (both new and existing) can not make any fresh investment in their existing MF schemes or in any new scheme if their PAN status is not valid.
If the PAN becomes invalid, existing investors will not be able to buy any additional units even in their existing MF folios.
The regular investments by the existing investors through Systematic Investment Plan (SIP) will also stop in case the PAN of an investor becomes invalid because of not linking it to their Aadhaar.
In case the PAN becomes invalid, MF investors can’t even access their own money invested in MF schemes as redemption requests will not be processed.
If the PAN of an investor becomes invalid, then any investment through a Systematic Transfer Plan (STP) will also be stopped.
An invalid PAN may also derail the monthly budget of an investor as the redemption through the Systematic Withdrawal Plan (SWP) will also stop.
Also, one may face higher TDS, disruption in banking services from July 1 if he/she fails to link his PAN with his/her Aadhaar number.
Hence it is advised that if there is any change in PAN details of an investor, causing problems in linking it with Aadhaar, he may request the respective AMCs or RTAs for updation of correct PAN before July 1, 2021.
However, if the given PAN is correct, investors need to take it up first with the Income Tax authorities for making corrections in PAN status and. Once the correction is made he can inform the AMCs/RTAs for making further validations.