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: 31 December 2025 for individuals who have obtained PAN with Aadhaar enrolment ID. 
• Penalty for linking PAN-Aadhaar after deadline: ₹1,000.
• Exemption for PAN-Aadhaar link: NRIs, 80+ citizens, residents of certain states.

What is the Last Date for PAN-Aadhaar Linking?

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

• Deadline extended to 31 December 2025 for individuals whose PAN was issued 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.

What is the PAN-Aadhaar Link Penalty?

The taxpayers who have not linked their PAN-Aadhaar within the last date of 31 May 2024 or 31 December 2025, can do so by paying a late penalty of ₹1,000. They must pay the PAN-Aadhaar link penalty before filing for the PAN-Aadhaar link on the Income Tax website. 

What is the 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 obtain government services, such as applying for a passport, obtaining subsidies and opening a bank account. 
• When the PAN-Aadhaar is not linked, obtaining a new PAN card may be difficult if the old one is damaged or lost, as it is mandatory to provide the Aadhaar number when applying for a new PAN card.

What Happens if PAN is Not Linked with Aadhaar Card?

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

• Taxpayers cannot file ITR or claim refunds with inoperative PAN cards.
• Tax Deducted at Source (TDS) will be charged at a higher rate of 20% instead of the standard 10%.
• Tax Collected at Source (TCS) will be charged up to 5% under Section 206CC.
• 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, except for a Basic Savings Bank Deposit Account (BSBDA).
  • Apply for the issuance of credit cards.
  • Open an account with a depository, participant, custodian of securities or any other person registered under the SEBI (Securities and Exchange Board of India) Act, 1992.
  • Purchase of bonds exceeding ₹50,000 issued by the Reserve Bank of India (RBI).
  • Payment for the purchase of mutual fund units exceeding ₹50,000.
  • Contract for the sale or purchase of securities (other than shares) of an amount exceeding ₹1,00,000 per transaction.
  • Cash deposits or withdrawals with a bank, co-operative bank or post office aggregating to ₹10,00,000 in a financial year.
  • Sell or purchase motor vehicles or motorcycles, except tractors, for an amount exceeding ₹5,00,000. 
  • Sale or purchase of shares of a company not listed on any recognised stock exchange of an amount exceeding ₹1,00,000 per transaction.
  • Payment of ₹50,000 or more to a company or an institution for acquiring its debentures or bonds.
  • Purchase, sale, gift or enter into a joint development agreement for any immovable property exceeding ₹20,00,000.
  • A time deposit with banks, Nidhi, post office or Non-Banking Financial Corporations (NBFCs) exceeding ₹50,000 or aggregating to more than ₹5,00,000 during a financial year.
  • Commence an account-based relationship with an insurer when the insurance premium exceeds ₹50,000 during a financial year.
  • One-time payment in cash of ₹1,00,000 or more to a hotel, restaurant, convention centre, banquet hall, or any person engaged in event management against a bill.
  • Sale or purchase of goods or services by any person of more than ₹2,00,000 per transaction.

However, the PAN can be made operative again within 7-30 days after payment of the PAN-Aadhaar link penalty of ₹1,000 and applying for PAN-Aadhaar linking.

What to do if Your PAN-Aadhaar is Not Linked Yet?

For PAN cardholders who have not yet linked their PAN with Aadhaar number, PAN status will be shown as ‘Active but inoperative’. 

• You can still link them by paying a fine of ₹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. 

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

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: Select ‘Income Tax Act, 2025’ and click ‘Continue’. 

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

Step 4: Enter the OTP and click ‘Continue’. On the next pay, click ‘Proceed’ under the ‘Income Tax’ tab.

Step 5: Select Tax Year as ‘2026-27’, Type of Payment (Minor Head) as ‘Other Receipts (500)’ and select ‘Fee for delay in linking PAN with Aadhar’, and click ‘Continue’.

Step 6: The PAN-Aadhaar link penalty amount will be pre-filled against ‘Others’ option. Click ‘Continue’ and pay the penalty.

You can pay the late penalty through net banking, debit card, over the counter, NEFT/RTGS or payment gateway option. 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 Link Aadhaar page.

Step 2: Enter the ‘PAN’ and ‘Aadhaar Number’ and click the ‘Validate’ button.

Step 3: Enter the required details and click the ‘Link Aadhaar’ button.

Step 4: Enter the OTP received on your mobile number and click ‘Validate’.

Step 5: The request to link the PAN-Aadhaar card will be successfully submitted. 

A taxpayer can also complete PAN-Aadhaar linking by logging into the Income Tax e-filing website, or sending an SMS in the required format or by visiting a PAN service centre.

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 ₹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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2. How To Change Address In Aadhar Card Online?
3. How to Apply for Aadhar Card? 
4. How To Change Name In Aadhaar Card Online?

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