PAN-Aadhaar Link Penalty: What Happens If PAN Card is Not Linked to Aadhaar Card?

Linking PAN with Aadhaar is mandatory under the Income Tax Act. If your PAN is not linked, it becomes inoperative, restricting financial transactions and tax compliance. However, you can still activate it by completing the PAN-Aadhaar linking process by paying a PAN–Aadhaar link penalty.

Key Highlights

• Last date to link PAN–Aadhaar (without penalty) is 31 December 2025. This is only for individuals who obtained PAN using Aadhaar Enrolment ID before 1 October 2024.
• PAN becomes inoperative if not linked (except exempt categories).
• PAN can still be activated by paying a Rs. 1,000 penalty and completing the linking process.
• Higher TDS/TCS rates apply for inoperative PAN under Sections 206AA & 206CC.
• Exempt individuals (NRIs, 80+ citizens, some states) do not need to link PAN and Aadhaar.

PAN-Aadhaar Linking

The government has revised deadlines for a specific category of PAN holders:

• Deadline extended to 31 December 2025 only for those issued PAN based on Aadhaar Enrolment ID before 1 October 2024.
• For all other individuals, the last date was 31 May 2024. Failure to link by then renders PAN inoperative.

Who falls under the Exempt Category for PAN-Aadhaar Linking?

The exempt category people need not link PAN-Aadhaar. The exempt category is as follows:

• Individuals residing in the states of Jammu and Kashmir, Assam and Meghalaya.
• A non-resident taxable person as per the Income-tax Act, 1961.
• People aged more than 80 years (Super Senior Citizens).
• Persons who are not citizens of India.

What to do if your PAN-Aadhaar is not Linked Yet?

For PAN cardholders who have not yet linked their PAN with Aadhaar number (except those who have obtained PAN card before 1st October 2024 with Aadhaar enrolment ID), PAN status will be shown as Active but inoperative. 

• You can still link them by paying a fine of Rs.1,000.
• Your PAN status will be Active and operative within 7-30 days. 
• You will have all your TDS credits showing in your Form 26AS and you can rightly claim them while filing taxes. 

The process to link PAN-Aadhaar after the deadline is provided in detail below.

Importance of Linking PAN with Aadhaar Card

PAN–Aadhaar linking is important because of the following reasons:

• The PAN card of a person will become inoperative when it is not linked to an Aadhaar card.
• PAN-Aadhaar linking is required when filing the Income Tax Return (ITR). The IT department may reject the ITR when PAN and Aadhaar are not linked.
• PAN and Aadhaar cards are required to be submitted to get government services, such as applying for a passport, obtaining subsidies and opening a bank account. Thus, it is difficult to access government services when PAN and Aadhaar cards are not linked.
• When the PAN-Aadhaar is not linked, getting a new PAN card may be difficult if the old one is damaged or lost since it is mandatory to mention the Aadhaar card number while applying for a new PAN card.

Consequences of not Linking PAN with Aadhaar Card

When the PAN-Aadhaar cards are not linked within the last date, it becomes inoperative as a result of which:

• Taxpayers cannot file ITR or claim refunds with inoperative PAN cards.
• The pending returns will not be processed, and pending refunds will not be issued to inoperative PAN cards.
• The TCS/TDS will be applicable at a higher rate.
• The TCS/TDS credit will not appear in Form 26AS, and TCS/TDS certificates will not be available.
• Taxpayers will be unable to submit 15G/15H declarations for nil TDS.
•  The following transactions cannot be done since the PAN card will be inoperative:
  • Open a bank account.
  • Issue of debit/credit cards.
  • Purchase of mutual funds units.
  • Cash deposit with a bank or post office during a day exceeding Rs.50,000.
  • Purchase of a bank draft or pay order in cash exceeding Rs.50,000 in a day.
  • A time deposit with banks, Nidhi, Non-Banking Financial Corporations (NBFCs), etc., exceeding Rs.50,000 or aggregating to more than Rs.2,50,000 during a financial year.
  • Payment for one or more prepaid payment instruments as defined by the Reserve Bank of India (RBI) through bank draft, pay order or banker’s cheque aggregating to more than Rs.50,000 in a financial year.
  • Sale or purchase of goods or services by any person more than Rs.2,00,000 per transaction.
  • All bank transactions exceeding Rs.10,000.

However, the PAN can be made operative again in 30 days, upon intimation of Aadhaar number to the prescribed authority after payment of PAN–Aadhaar link penalty of Rs.1,000.

Penalty for Non-linking of PAN with Aadhaar Card

The taxpayers who have not linked their PAN-Aadhaar within the last date of 30th June 2023, can do so by paying a late penalty of Rs.1,000. They must pay the PAN–Aadhaar link penalty before filing for the PAN-Aadhaar link on the Income Tax website. However, they need to ensure they have a valid PAN number and Aadhaar number to pay the penalty.

Citizens who have obtained their PAN card after 1st October 2024 on the basis of Aadhaar enrolment ID need not pay any penalty to link PAN-Aadhaar within the deadline of 31st December 2025.

How to Activate Inoperative PAN Card and Link with Aadhaar Card?

When the PAN card is not linked with the Aadhaar card, it becomes inoperative. However, you can re-activate your PAN card by first paying the PAN–Aadhaar link penalty and then applying to link PAN with Aadhaar card.

Follow the below steps to pay the penalty for re-activating an inoperative PAN card:

Step 1: Visit the Income Tax e-Filing Portal.

Step 2: Click the ‘e-Pay Tax’ option under the ‘Quick Links’ heading.

Step 3: Enter the ‘PAN’ number under ‘PAN/TAN’ and ‘Confirm PAN/TAN’ column, enter mobile number and click the ‘Continue’ button.

Step 4: After OTP verification, it will be redirected to e-Pay Tax page. Click the ‘Continue’ button.

Step 5:  Click the ‘Proceed’ button under the ‘Income Tax’ tab.

Step 6: Select Assessment Year as ‘2024-25’ and ‘Type of Payment (Minor Head)’ as ‘Other Receipts (500)’ and select ‘Fee for delay in linking PAN with Aadhar’ and click the ‘Continue’ button.

Step 7: The applicable amount will be pre-filled against ‘Others’ option. Click ‘Continue’ button and make the payment.

You can pay the late penalty on Income Tax e-filing Portal through net banking, debit card, over the counter, NEFT/RTGS or payment gateway option. However, you can pay the PAN–Aadhaar link penalty through the payment gateway option when you have a bank account with the following authorised banks:

• Axis Bank
• Bandhan Bank
• Bank of Baroda
• Bank of India
• Bank of Maharashtra
• Canara Bank
• Central Bank of India
• City Union Bank
• DCB Bank
• Federal Bank
• HDFC Bank
• ICICI Bank
• IDBI Bank
• Indian Bank
• Indian Overseas Bank
• IndusInd Bank
• Jammu & Kashmir Bank
• Karur Vysya Bank
• Kotak Mahindra Bank
• Karnataka Bank
• Punjab & Sind Bank
• Punjab National Bank
• RBL Bank
• South Indian Bank
• State Bank of India
• UCO Bank
• Union Bank of India 

After making the payment, proceed to link your PAN with Aadhaar card.

How to Link a PAN with an Aadhaar Card after Deadline?

Taxpayers can link their PAN with their Aadhaar after four to five days of paying the penalty by following the steps below:

Step 1: Go to the Income Tax e-filing portal.

Step 2: Under the ‘Quick Links’ heading on the left-hand side of the homepage, click on the ‘Link Aadhaar’ option.

Step 3: Enter the ‘PAN’ and ‘Aadhaar Number’ and click the ‘Validate’ button.

Step 4: A pop-up message stating ‘Your payment details are verified’ will appear when the penalty payment has been verified. Click the ‘Continue’ button to submit the linking request.

Step 5: Enter the required details and click the ‘Link Aadhaar’ button.

Step 6: Enter the OTP received on the mobile number.

Step 7: The request to link the PAN-Aadhaar card will be successfully submitted. 

A taxpayer can also visit a PAN card centre, fill out the appropriate form and submit it with photocopies of PAN and Aadhaar cards for PAN-Aadhaar linking.

Final Word

PAN–Aadhaar linking is essential to keep your PAN active for tax filing and financial transactions. Even if your PAN becomes inoperative, you can easily reactivate it by paying the Rs. 1,000 PAN–Aadhaar link penalty and completing the linking process. Linking ensures smooth ITR filing, accurate TDS credits, and uninterrupted access to key financial services.

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