Link PAN, The Permanent Account Number (PAN) and Aadhaar are mandatory identifying documents for Indian citizens, issued by the Income Tax Department and the Unique identification Authority of India, respectively. To streamline tax administration, the Income Tax Department has enforced the linkage of PAN and Aadhaar numbers.
Failure to link these documents disables the PAN, limiting its use in financial transactions. Individuals can still link their PAN to Aadhaar by paying a penalty of Rs. 1,000. After completing this step, the PAN is normally reactivated within 30 days.
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PAN-Aadhaar Linking
According to the IT department’s most recent circular, the deadline for linking PAN-Aadhaar is December 31, 2025 for persons who received a PAN card using their Aadhaar enrolment ID before October 1, 2024.
The deadline for linking PAN-Aadhaar without penalty for all other PAN cards (excluding those who belong under the exempt category who received a PAN card before October 1, 2024 with an Aadhaar enrolment ID) was June 30, 2023. As a result, all PAN cardholders who have both a PAN card and an Aadhaar number must connect their PAN-Aadhaar before June 30th, 2023, or their PAN would become inoperative on July 1st.
The IT department extended the deadline to link PAN and Aadhaar to May 31, 2024, by paying the penalty. Failure to link before the deadline will result in a higher rate of tax deduction/collection (TDS/TCS) under Sections 206AA and 206CC of the Income Tax Act, 1961.
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Exemptions from Mandatory PAN-Aadhaar Linking
People in the exempt category do not need to link their PAN and Aadhaar. The exemption categories are as follows:
- Residents of Jammu & Kashmir, Assam, and Meghalaya.
- A non-resident taxable individual under the Income-tax Act of 1961.
- Super Senior Citizens are those over the age of 80.
- Individuals who are not citizens of India.
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Deadline to link PAN with Aadhaar card
The last deadline for PAN-Aadhaar linking is December 31, 2025, for people who received their PAN using an Aadhaar enrolment ID before October 1, 2024. For all other individuals, the deadline to link PAN and Aadhaar was May 31, 2024.
“I haven’t linked my PAN with Aadhaar yet—what should I do?”
PAN cardholders who have not yet linked their PAN with an Aadhaar number (excluding those who acquired their PAN card before October 1, 2024 with an Aadhaar enrolment ID) would have their PAN status displayed as Active but inoperative. However, you can still link them by paying a Rs.1,000 fee; within 7-30 days, your PAN status will be Active and functional, and all of your TDS credits will be shown in your Form 26AS, allowing you to correctly claim them when filing taxes. The method of linking PAN and Aadhaar after the deadline is described in full below.
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Significance of Connecting PAN with Aadhaar
- A person’s PAN card becomes inoperative if it is not linked to an Aadhaar card.
- When filing an Income Tax Return (ITR), you must link your PAN and Aadhaar. The IT department may reject the ITR if PAN and Aadhaar are not linked.
- PAN and Aadhaar cards are necessary for government services such as passport applications, subsidies, and bank account opening. As a result, it is difficult to obtain government services when PAN and Aadhaar cards are not linked.
- while the PAN-Aadhaar is not linked, it may be difficult to obtain a new PAN card if the old one is destroyed or stolen, as the Aadhaar card number must be mentioned while filing for a new PAN.
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What happens if PAN is not linked to Aadhaar
When the PAN-Aadhaar cards are not linked within the latest date, they become inactive, resulting in:
- With an inoperative PAN card, taxpayers cannot file an ITR or receive a refund.
- Pending returns will not be processed, and refunds will not be granted for inoperative PAN cards.
- The TCS/TDS will apply at a greater rate.
- TCS/TDS credit will not appear on Form 26AS, and TCS/TDS certificates will not be issued.
- Taxpayers will be unable to file 15G/15H declarations with no TDS.
- The following transactions cannot be completed because the PAN card will be inoperative:
- Open a bank account.
- Issue of debit/credit cards.
- Purchase of mutual fund units.
- A cash deposit of more than Rs.50,000 at a bank or post office during a single day.
- Purchase of a bank draft or pay order in cash for more than Rs.50,000 in a day.
- A time deposit with banks, Nidhi, or Non-Banking Financial Corporations (NBFCs) that exceeds Rs.50,000 or totals more than Rs.2,50,000 in a fiscal year.
- Payment for one or more prepaid payment instruments as defined by the Reserve Bank of India (RBI) through bank draft, or banker’s check totalling more than Rs 50,000 in a fiscal year.
- Any person selling or purchasing products or services for more than Rs.2,00,000 in a single transaction.
- All bank transactions above Rs 10,000.
However, the PAN can be reactivated in 30 days after providing the prescribed authority with the Aadhaar number and paying a Rs.1,000.
Read also: ITR-U: Updated Income Tax Return – Eligibility, Filing & Time Limits
Penalty applicable if PAN is not linked with Aadhaar
Taxpayers who have not linked their PAN and Aadhaar by the deadline of June 30, 2023, can do so by paying a Rs.1,000 late penalty. They must pay the penalty before submitting the PAN-Aadhaar link on the Income Tax website. To pay the penalty, they must have a valid PAN and an Aadhaar number.
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