The Central Board of Direct Taxes (CBDT) has issued a final warning to all Permanent Account Number (PAN) holders who have not yet linked their PAN card with their Aadhaar number. The first notice circulated about this mandatory process was on July 1, 2017, and now the deadline for completing the process is December 31, 2025. Failing to complete the process by the last date will lead to serious financial consequences as all unlinked PANs will be inoperative from January 1, 2026.
This move would bring an end to the years of effort by the Income Tax Department to curb tax evasion, eliminate duplicate PANs, and create a transparent financial ecosystem. While the previous deadlines have lapsed, this latest date set by CBDT would be treated as the final date for all non-compliant taxpayers.
What 'inoperative' PAN Means
Halt on tax filings: Filing an Income Tax Return (ITR) would not be possible for an inactive PAN. Any pending processing returns would also be halted.
Blocked refunds: The Income Tax Department would not be able to issue any pending tax refunds.
Higher Tax Deduction (TDS/TCS): This is the most significant financial problem. As per sections 206AA and 206CC of the Income Tax Act, Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) would be at a non-PAN rate. Non-Pan rate refers to the higher rate of TDS and TCS.
Failed Financial Transactions: The KYC (Know Your Client) with banks and financial institutions would become invalid in case of an inactive PAN.
How to link your PAN and Aadhaar
Pay the fees: At first, a flat fee of ₹1,000 needs to be paid via the “e-Pay Tax” service on the Income Tax e-filing portal (incometax.gov.in). This payment should be made under “Other Receipts (500)” for the assessment year 2025-26. The processing of the payment can take a few hours to a day.
Submit the request: After the payment is processed, log in to the e-filing portal and check for the “Link Aadhaar” section. Enter your PAN and Aadhaar details to submit the linking request.
Check status: The linking would not happen instantly. It may take several days for the request to be validated by UIDAI.
If a PAN is inoperative, it can be reactivated by following the same process by paying a ₹1,000 fee, and the PAN will again become operative within 30 days of submitting the request.
