PAN-Aadhaar Linking Deadline 2025: Who Must Link, What Happens If PAN Turns Inoperative From January 1, 2026; Penalties, Exemptions and Step-by-Step Process Explained

New Delhi, December 26: The government has once again underlined the importance of checking your PAN-Aadhaar Link Status, making Aadhaar-PAN linking mandatory for specific categories of PAN holders by December 31, 2025. The latest directive aims to clean up legacy PAN records and prevent misuse in financial and tax systems.

Failure to complete the linking within the deadline will render the PAN inoperative from January 1, 2026, severely affecting income tax filings, refunds, banking services and investment transactions. Taxpayers, investors and salaried individuals are being advised to verify their PAN-Aadhaar Link Status well in advance to avoid disruption. Forgot Your PAN? Income Tax India Explains How To Retrieve Permanent Account Number Using Aadhaar Card.

Who Needs to Link PAN With Aadhaar

Under Section 139AA(2A) of the Income Tax Act, Aadhaar–PAN linking is compulsory for individuals who were allotted a PAN using an Aadhaar enrolment ID before October 1, 2024. As clarified by the Central Board of Direct Taxes, PANs that remain unlinked by December 31, 2025 will become inoperative. PAN-Aadhaar Link Deadline Nears: December 31 Last Date to Keep PAN Card Active, Know How To Check PAN-Aadhaar Link Status.

This requirement impacts:

• Individuals filing income tax returns

• Those conducting banking or investment transactions

• People involved in stock market, mutual fund or high-value financial dealings

An inoperative PAN cannot be used for tax or KYC-related purposes and may trigger higher tax deductions.

Special Deadline for PAN Issued Using Aadhaar Enrolment ID

In a notification dated April 3, 2025, the CBDT announced a special window for individuals who obtained PAN using an Aadhaar enrolment ID instead of an Aadhaar number. Such PAN holders must link their PAN with their actual Aadhaar number by December 31, 2025.

Importantly, no additional penalty will be levied if the linking is completed within this special period. However, for other PAN holders, the INR 1,000 fee under Section 234H continues to apply, especially where PAN was issued before July 1, 2017 and not linked earlier.

What Happens If Your PAN Becomes Inoperative

If your PAN-Aadhaar Link Status shows “not linked” after the deadline, financial activity may come to a halt. Key consequences include:

• ITR filing blocked: Returns cannot be filed and refunds will not be processed
• Higher TDS/TCS: Tax deducted at higher rates under Sections 206AA and 206CC
• Forms 15G/15H rejected: Loss of tax relief benefits
• KYC failure: Issues with bank accounts, mutual funds and stock trading
• Refunds withheld: Refunds and interest may not be issued

Penalty and Reactivation Rules

Reactivating an inoperative PAN requires payment of a INR 1,000 penalty. Additional verification may be sought, and taxpayers are advised to avoid major transactions until the PAN becomes operative again.

How to Link PAN With Aadhaar: Step-by-Step Guide

The linking process is simple and online:

• Visit the Income Tax e-filing portal
• Click on “Link Aadhaar” (no login required)
• Enter PAN, Aadhaar number and name
• Verify using OTP
• Pay INR 1,000 via e-Pay Tax if applicable
• Submit the request
• The PAN-Aadhaar Link Status is usually updated within 3–5 days.

If Your PAN Is Already Inoperative

There is no need to panic. Log in to the Income Tax portal, pay the penalty, complete the linking and your PAN generally becomes operative again within 30 days. Checking your PAN-Aadhaar Link Status regularly can help you avoid last-minute hassles and financial roadblocks.

(The above story first appeared on LatestLY on Dec 26, 2025 04:12 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).