NEW DELHI: The Income Tax Department has issued a final call for taxpayers to link their Permanent Account Number (PAN) with Aadhaar by the looming deadline of December 31, 2025. Failing to complete this mandatory linkage will result in the PAN card becoming “inoperative,” leading to significant financial hurdles and a mandatory late fee.
The ₹1,000 Penalty and Deadline Rules
According to the latest Central Board of Direct Taxes (CBDT) directives, individuals who have not yet linked their documents must pay a penalty of ₹1,000 under Section 234H of the Income Tax Act before submitting the linking request.
While the deadline is December 31, there is a specific relaxation for those who obtained their PAN card after October 1, 2024, using an Aadhaar enrolment ID; these users can link their documents free of charge until the end of the year. However, for the majority of taxpayers who missed previous windows, the ₹1,000 fee is mandatory.
What Happens if You Miss the Deadline?
From January 1, 2026, any unlinked PAN will be declared inoperative. The consequences of an inactive PAN are severe:
- No Tax Refunds: You will not be able to claim pending income tax refunds.
- Higher TDS/TCS: Taxes will be deducted at much higher rates on your income.
- Banking Blocks: You may face issues in opening new bank accounts or conducting high-value transactions.
- Investment Restrictions: Mutual fund investments and stock market trading through Demat accounts could be frozen.
Step-by-Step: How to Link Your Aadhaar and PAN Online
Taxpayers can complete the process in a few minutes via the official e-filing portal:
- Visit the Portal: Go to www.incometax.gov.in.
- Quick Links: Click on the ‘Link Aadhaar’ option under the ‘Quick Links’ section.
- Enter Details: Provide your PAN and Aadhaar number.
- Pay the Fee: If applicable, pay the ₹1,000 penalty through ‘e-Pay Tax’ using Minor Head (500).
- Validation: After payment, wait 4-5 working days for the payment to reflect, then submit the linking request.
- OTP Verification: Enter the 6-digit OTP received on your Aadhaar-registered mobile number.
Exempted Categories
Linking is mandatory for most, but certain groups remain exempt, including:
- NRIs (Non-Resident Indians).
- Individuals aged 80 years or older.
- Residents of Assam, Meghalaya, and Jammu & Kashmir.
- Non-citizens of India.
With only a few days remaining, taxpayers are advised to verify their status immediately to avoid the last-minute rush and potential financial penalties.
