PAN may turn inactive if not linked with Aadhaar by December 31

Failure to link PAN with Aadhaar by December 31 may result in deactivation, affecting tax filing, refunds, banking, investments and KYC compliance. The Income Tax Department has urged taxpayers to complete the process to avoid penalties and financial disruption.

New Delhi: The deadline to link Permanent Account Number (PAN) with Aadhaar is December 31, and failure to do so may result in the PAN becoming inactive after this date.

Taxpayers who have not completed the linking process are advised to act promptly to avoid financial and compliance-related difficulties.

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According to a notification issued by the Income Tax Department on April 3, 2025, individuals who were allotted a PAN on or after October 1, 2024, are required to link their PAN with Aadhaar by December 31, 2025.

For all other PAN holders, the original deadline for linking PAN with Aadhaar was May 31, 2024.

If the PAN–Aadhaar linking is completed on or before December 31, a penalty of Rs 1,000 will be applicable, as the original deadline has already passed.

However, failure to link even after this date could lead to the PAN being deactivated.

An inactive PAN can cause several problems for taxpayers. Filing income tax returns may become difficult, and those awaiting refunds could see their refunds getting stuck.

In such cases, taxpayers may have to go through a lengthy process, including applying for a new PAN, to resolve the issue.

Additionally, non-linking of PAN with Aadhaar may result in higher rates of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS).

Taxpayers may also lose access to Form 26AS and may not receive TDS or TCS certificates.

Banking and financial transactions can also be severely affected. Individuals with an inactive PAN may not be able to open bank accounts, obtain credit or debit cards, deposit cash exceeding Rs 50,000, or carry out bank transactions above Rs 10,000.

Know Your Customer (KYC) processes may also remain incomplete, leading to denial of various government services.

Moreover, investments in mutual funds and equities could be halted, adding to the financial inconvenience.

Given the wide-ranging implications, taxpayers are strongly advised to link their PAN with Aadhaar before the December 31 deadline to avoid disruption.