If you haven’t linked your PAN with Aadhaar yet, it may be time to act quickly. The Income Tax Department recently issued a directive, making Aadhaar–PAN linking mandatory for specific categories of PAN holders by December 31, 2025.
Those who fail to complete the process by the deadline will find their PAN inoperative from January 1, 2026, potentially disrupting income tax filing, tax refunds, banking transactions, and investment-related activities.
Who needs to link PAN with Aadhaar?
As per Section 139AA(2A) of the Income Tax Act, Aadhaar–PAN linking is compulsory for all individuals who were allotted a PAN on or before July 1, 2017, and who are eligible to obtain an Aadhaar number. This includes taxpayers, investors, and anyone who undertakes high-value or KYC-based financial transactions. An inoperative PAN can lead to stalled services, higher TDS/TCS deductions, and non-processing of returns.
This rule applies to anyone who:
-Files income tax returns
-Conducts banking or investment transactions
-Conducts transactions in the stock market, mutual funds, or high-value transactions
If PAN-Aadhaar linking is not performed, the PAN will become inoperative and you will not be able to access many financial services.
New Update: Special deadline for those who received PAN using Aadhaar enrolment ID
The CBDT first issued a notification on April 3, 2025.
According to this, those who obtained PAN using Aadhaar Enrolment ID instead of Aadhaar number are now required to link their PAN with their actual Aadhaar number by December 31, 2025.
If the linking is not completed on time, the PAN will become inoperative from January 1, 2026.
There will be no additional penalty for completing the link within this period.
For other PAN holders, the Rs 1,000 fee (under Section 234H) will remain applicable as before.
What will happen if your PAN becomes inoperative? Serious impact
An inoperative PAN means your financial activities will come to a virtual halt. The impact will be as follows:
- ITR filing will be impossible
You will not be able to file your income tax return, and tax refunds will not be processed.
- Higher TDS/TCS will be deducted
If your PAN is not available or is inoperative, you will be subject to higher TDS/TCS deductions under Sections 206AA and 206CC.
- Forms 15G/15H will not be accepted
Reliefs available to senior citizens and savings account holders may be discontinued.
- KYC failure—bank and investment services may be halted
Bank accounts, mutual fund investments, and stock trading—all may be frozen.
- Refunds will be withheld
Refunds will not be issued on inoperative PANs, and the likelihood of receiving interest will also be reduced.
- Penalty for Reactivation
A penalty of Rs 1,000 will be required to reactivate your PAN and additional verification may be required.
How to Link PAN-Aadhaar? Simple process
The government has simplified PAN-Aadhaar linking:
-Go to the Income Tax e-filing portal
-Click on “Link Aadhaar” (no login required)
-Enter your PAN, Aadhaar, and name
-Enter the OTP
-If you missed the previous deadline, pay the Rs 1,000 fee through e-Pay Tax
-Submit the link request
-The link status is usually updated on the portal within 3–5 days.
What to do if your PAN is already inoperative?
Don’t panic. You can reactivate it by:
-Go to the Income Tax Portal
-Pay the Rs 1,000 penalty through e-Pay Tax
-Complete the PAN-Aadhaar linking
-The PAN will be operational again within 30 days.
Do not initiate any major transactions during this time, as KYC verification may fail.
Conclusion: The December 31, 2025 deadline is extremely important.
The downside of not linking your PAN-Aadhaar isn’t just a penalty—it could halt your entire financial activity. If you’re among those who used your PAN with your Aadhaar Enrolment ID, this is your last chance. Keep your financial documents safe, don’t let your banking and investments suffer. Complete the PAN-Aadhaar linking before December 31, 2025.