Your PAN Card May Become Inactive If You Don’t Complete This Task

In a fresh notification, the Central Board of Direct Taxes (CBDT) has directed that individuals who were allotted a PAN card using their Aadhaar enrolment ID (and not the actual Aadhaar number) must now inform the Income Tax Department of their Aadhaar number by December 31, 2025.

This applies specifically to PANs issued using enrolment IDs before October 1, 2024. From that date onward, individuals will no longer be allowed to apply for PAN using an enrolment ID at all—they must have an Aadhaar number ready.

The Legal Background Explained Simply
Section 139AA of the Income-tax Act, 1961, introduced in 2017, made it compulsory for individuals who are eligible for Aadhaar to quote it when applying for PAN or filing income tax returns. But there was a small window for those who didn’t have their Aadhaar number yet—these individuals could use their enrolment ID instead.

Chartered Accountant Gaurav Makhijani, Associate Partner at Rödl & Partner India, broke it down:
"A proviso was added to Section 139AA to allow people to apply for PAN using an Aadhaar enrolment ID. But with changes brought in through the Finance Act, 2024, this option ends from October 1, 2024. Now, those who got PAN using an enrolment ID must update their records with the actual Aadhaar number by December 31, 2025."

What Happens If You Don’t Link Aadhaar with PAN?
If you miss the December 31, 2025 deadline, your PAN will become inoperative. That’s not just a technical issue—it can have real consequences for your taxes.

Here’s what you could face:
You won’t receive any income tax refunds.
If a refund is processed, no interest will be paid on it for the period during which the PAN was inactive.

TDS (tax deducted at source) will be done at a higher rate, under Section 206AA of the Income-tax Act.

Your tax return may be treated as defective or even not filed, which can lead to penalties and loss of certain benefits like carry-forward of business losses.

Makhijani warns: “If your PAN is inactive, there’s a chance the tax return filed by you might be considered defective. If the defect isn’t corrected within 15 days, it could be treated as not filed at all. That opens the door to further penalties and denial of carry forward of losses.”

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Can You Still Link It After the Deadline?

Yes—but it comes at a cost.

If you miss the December 31, 2025 deadline, you will be allowed to link your Aadhaar number after paying a penalty of Rs 1,000 under Section 234H. But even after updating, the tax complications during the inactive period—like no refund interest and higher TDS—won’t be reversed.

“This transitional phase can cause a lot of trouble for taxpayers,” Makhijani says. “That’s why it’s strongly recommended to complete the Aadhaar linking on time.”
 

How to Link Aadhaar with PAN
Thankfully, the process is easy and can be done online:

Visit the official Income Tax e-filing portal: https://www.incometax.gov.in
Under the “Quick Links” section, on ‘Link Aadhaar’
Enter your PAN, Aadhaar number, name as per Aadhaar, and the required OTP

Submit—and you’re done!

This facility is already live and is expected to remain available for those required to link under this new rule.

Bottom Line: Don’t Wait Till the Last Minute
If you’re someone who got a PAN card using an Aadhaar enrolment ID before October 1, 2024, you must link your Aadhaar number by December 31, 2025.

The government’s push is not just administrative—it has direct consequences for your finances and tax compliance. Avoid the unnecessary hassle of an inactive PAN, penalties, or delayed refunds.