The Income Tax Department has sent out new reminders to taxpayers to link their Aadhaar with their Permanent Account Number (PAN) with just two days remaining before the December 31 deadline. According to the most recent Central Board of Direct Taxes (CBDT) notification from April 2025, the PAN will become inactive on January 1st if the linking is not finished by this date.
Why is the deadline for linking Aadhaar and PAN cards important?
Section 139AA of the Income Tax Act requires most taxpayers to link Aadhaar with PAN (with the exception of some exempt categories, such as non-residents in specific circumstances). In addition to ensuring smooth identity verification for financial and tax-related transactions, the procedure aids in reducing tax evasion.
Key repercussions of missing the deadline
If Aadhaar is not linked to PAN card by December 31, the PAN will become inoperative, triggering a series of penalties and restrictions -
1. No Tax Refunds
Taxpayers will not receive any income tax refunds due under the Act. Moreover, no interest will be payable on such refunds for the period the PAN remains inoperative.
2. Higher TDS and TCS Rates
Tax deducted at source (TDS) or tax collected at source (TCS) will be applied at significantly higher rates - often double the normal rate - as per sections 206AA and 206CC of the Income Tax Act. This means more money withheld from salaries, interest income, property sales, or other transactions.
3. Issues with Tax Credits and Forms
TDS/TCS credits will not reflect in Form 26AS, making it difficult to claim them while filing returns. Taxpayers will also be unable to submit Forms 15G/15H to avoid TDS on interest income.
4. Restrictions on Financial Transactions
Several high-value transactions will be blocked or complicated, including:
- Opening new bank accounts or issuing debit/credit cards.
- Cash deposits exceeding Rs. 50,000 in a single day.
- Purchasing bank drafts or pay orders in cash over Rs. 50,000.
- Certain banking transactions above Rs. 10,000.
- Investing in mutual funds or other securities requiring PAN verification.
5. Challenges in availing government services
An inoperative PAN can hinder access to various government schemes, subsidies, passport applications, or other services that require both Aadhaar and PAN submission. Replacing a lost or damaged PAN may also become difficult, as Aadhaar details are mandatory for new applications.
Can you link Aadhaar-PAN cards after the deadline?
Yes, linking remains possible even after December 31, but it will attract a late fee of up to Rs. 1,000. Once the fee is paid and linking completed, the PAN can be reactivated within a few days to a month.
Taxpayers are advised to check their linking status immediately on the Income Tax e-filing portal and complete the process online to avoid these repercussions.
Step-by-step method on linking Aadhaar-PAN card online
1. Visit the Income Tax e-filing portal (incometaxindia.gov.in).
2. Select the 'Link Aadhaar' option under Quick Links.
3. Enter your PAN and Aadhaar number.
4. If a fee is applicable, click 'Continue to Pay Through e-Pay Tax'.
5. Enter your PAN again, confirm details, and provide a mobile number for OTP verification.
6. Validate using the OTP received.
7. Once successful, you will receive a confirmation.
