As the PAN-Aadhaar linking deadline approaches, taxpayers must ensure compliance to avoid disruptions in financial and tax-related activities.
From January 1, 2026, PANs not linked to Aadhaar will become inoperative, affecting income tax filing, refunds, and various financial transactions. Understanding the rules, deadlines, and process is essential for smooth compliance.
Read on to learn more about the PAN-Aadhar move of the Indian government, what happens if you are not linked and how to link them.
PAN-Aadhaar Linking: What is it?
PAN (Permanent Account Number) is a critical identifier for all financial and tax-related transactions in India. Linking it with Aadhaar is mandated under Section 139AA(2A) of the Income Tax Act.
Think of it like linking your personal ID to your financial ID.
More accurately, linking your government-issued identity (Aadhaar) with your financial identifier (PAN) to ensure compliance and smooth financial transactions.
Once linked, your PAN becomes operative and allows seamless filing of returns, claiming refunds, and conducting high-value financial transactions.
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Key Deadlines for PAN-Aadhar Linking
The government had provided multiple deadlines in the past. Those were:
- Original Deadline: June 30, 2023 (no penalty).
- Extended Deadline: May 31, 2024 (penalty applicable post this date).
- Special Extension: December 31, 2025, for PAN issued using Aadhaar enrolment ID.
| Failure to link by December 31, 2025, will render PAN inoperative from January 1, 2026. |
Who Must Link PAN and Aadhaar?
The PAN-Aadhar linkage is a must for the following citizens:
- Indian citizens holding PAN and Aadhaar.
- PAN holders issued on or before July 1, 2017, who are eligible for Aadhaar.
Exemptions:
- Residents of Jammu & Kashmir, Assam, and Meghalaya.
- Individuals aged 80 years or above.
- Non-resident taxable persons.
Consequences of Not Linking PAN with Aadhaar
If PAN is not linked with your Aadhar, starting 1st January 2026, you will be in heavy trouble. What happens exactly is that:
- No ITR filing or refund processing.
- Higher TDS/TCS deductions are applicable.
- Banks, mutual funds, and other financial institutions may block account access.
- Submission of Forms 15G/H (to request non-deduction of TDS on certain types of income, primarily interest income) will be rejected.
Simply put, here is an overview for you to set an alarm:
| Deadline | Who It Applies To | Penalty/Consequence |
| December 31, 2025 | PAN holders issued using Aadhaar enrolment ID | PAN will become inoperative from January 1, 2026, if not linked; there is no additional penalty if linked by this date |
| January 1, 2026 | All non-linked PANs | PAN marked inoperative; cannot file ITR, claim refunds, or submit Forms 15G/H |
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Linking PAN and Aadhaar
The process of linking your PAN and Aadhaar is pretty straightforward and can be done online or via SMS:
Online Process
Here are the steps you can follow to link your PAN and Aadhaar online:
- Visit the Income Tax e-filing portal.
- Click ‘Link Aadhaar’.
- Enter PAN, Aadhaar number, Name, and Date of Birth.
- Verify the OTP sent to the registered mobile number.
SMS Option
If you are opting for the SMS option, simply send:
UIDPAN <12-digit Aadhaar> <10-digit PAN> to 567678 or 56161.
Penalty Payment (If Required):
Since it is past the ‘free’ window of PAN-Aadhaar linking, you would have to pay a fee of ₹1,000 to link it now. To pay your fine and link your PAN and Aadhaar, follow the steps given below:
- Visit the Income Tax e-Filing portal.
- Choose the e-Pay Tax option.
- Select Minor Head 500 under Assessment Year.
- Pay ₹1,000 via net banking or debit/credit card.
Documents Required for PAN-Aadhaar Linking
The process of linking PAN and Aadhaar is fairly easy and requires minimal documents. These include:
- PAN Card: Permanent Account Number.
- Aadhaar Number: Aadhaar card issued by UIDAI.
- Registered Mobile Number: Must match with Aadhaar for OTP verification.
- Identity Proof: If there are discrepancies in names.
- Having these ready ensures smooth processing and avoids delays.
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Common Issues During Linking
Although the process is simple, some people face issues while completing this process—sometimes system errors and sometimes errors caused by people themselves. Some of these are:
- Name Mismatch: Ensure Aadhaar and PAN names match exactly.
- Multiple PANs Linked: One Aadhaar can link to only one PAN.
Checking the linking status on the portal helps monitor progress.
How PAN Impacts Lending and Personal Loans
Your PAN plays a crucial role in the lending ecosystem.
Banks and financial institutions use PAN as a primary identifier to track your credit history, repayment behaviour, and tax compliance.
When applying for personal loans, home loans, or other credit facilities, lenders verify your PAN to ensure you have no defaults and assess your creditworthiness. A valid and operative PAN enables smooth processing, faster approvals, and often better loan terms.
If you are someone seeking flexible personal loan options, platforms like BuddyLoan aggregate offerings from multiple lenders, helping you compare interest rates, eligibility, and repayment terms to find the most suitable personal loan for your profile efficiently.
Special Considerations
Although the government has given multiple chances to complete the linking process within due dates, a big population has not done so. The deadline on 31st Dec 2025 is proposed as the final straw.
However, there is a silver lining, as some special considerations:
- Individuals with PAN issued using Aadhaar enrolment ID should complete linkage by December 31, 2025.
- PAN inoperative status can be reversed after completing the linking and paying the penalty, if any.
- NRIs and residents of exempted states are not required to link.
Conclusion
Linking your PAN with Aadhaar is not an optional step anymore. It is essential for maintaining the operational status of your PAN and ensuring uninterrupted financial transactions.
Ensure you complete the process well before January 1, 2026, verify the status online, and keep all documents ready. Timely action avoids penalties, higher tax deductions, and disruptions in banking and investment activities.
If you are planning on lending money, never forget to check your credit score beforehand so that you would have an idea of what you should expect.
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