PAN Cards Update: These PAN cards will be deactivated from January 1

PAN Cards Update: The PAN cards (Permanent Account Number) that will be deactivated (rendered inoperative) from January 1, 2026, are those that are not linked with the owner’s Aadhaar number by the deadline of December 31, 2025.

It has been made mandatory to link PAN with Aadhaar card. Thus, PAN cards that are not linked to Aadhaar will be deactivated from next year. That is, such PAN numbers will become inoperative from January 1, 2026. Without PAN, you may not be able to access many financial services.

Those who obtained PAN cards before October 1, 2025, have been given time till December 31, 2025 to link it to Aadhaar. The Central Board of Direct Taxes has said that if the PAN is not linked by then, it will be invalidated.

PAN or Permanent Account Number is an identification number issued by the Income Tax Department to every individual. It is issued for tax purposes. PAN is mandatory for many financial transactions, from opening a bank account to depositing large amounts of cash. Thus, most of the financial activities of a person are recorded digitally through PAN.

An inoperative Permanent Account Number (PAN) due to non-linking with Aadhaar results in significant financial and compliance consequences. Essentially, your PAN card is treated as if you don’t have one for many crucial transactions.

Here is a breakdown of what happens if your PAN is not linked to Aadhaar by the deadline (currently December 31, 2025):

Impact of Inoperative PAN

You cannot file or verify your Income Tax Returns (ITR).

Any tax refunds due to you will be withheld (not issued).

Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) will be deducted at significantly higher rates (often 20% or more, depending on the section) as per Sections 206AA and 206CC of the Income Tax Act. This impacts your net take-home income.

TDS/TCS credits will not be reflected in your Form 26AS, making it difficult to claim them while filing returns.

You cannot submit Form 15G or 15H to a bank or financial institution to avoid TDS on interest income, forcing a higher rate of deduction.

Pending Income Tax Returns will not be processed.

Disruption of Financial Transactions:

An inoperative PAN can block or complicate nearly all major financial and investment activities:

Banking: You cannot open a new bank or Demat account.

Some high-value transactions like cash deposits exceeding Rs 50,000 may be restricted or flagged.

Investments: You cannot make new investments in Mutual Funds, stocks, bonds, or other financial instruments.

Existing Systematic Investment Plans (SIPs) and salary credits may also be disrupted.

KYC: You will be unable to complete mandatory KYC updates with banks, mutual funds, or stockbrokers.

Property: Transactions related to the purchase or sale of immovable property may be hampered.

Loans: Applications for loans or credit facilities may be negatively impacted.

Reactivation of PAN:

The good news is that an inoperative PAN can be reactivated.

To make it operative again, you must:

1. Pay the prescribed fee (currently Rs 1,000 for linking after the original deadlines).

2. Complete the PAN-Aadhaar linking process on the Income Tax Department’s portal.

Once successfully linked, the PAN is typically made operative again within 30 days.

However, you will have faced the consequences (like higher TDS) during the inoperative period.

Step to link PAN to Aadhaar:

Visit the Income Tax e-filing website. Its address is as follows: http://www.incometax.gov.in

Click on ‘Link Aadhaar’ under the Quick Links section on the homepage of the website.

Enter your 10-digit PAN number and 12-digit Aadhaar number.

Enter the name as per Aadhaar.

Check the ‘I agree to validate my Aadhaar details’ box.

Receive an OTP through the mobile number linked to Aadhaar and enter it

Click on Validate.

In case, you are linking after December 31, you may have to pay a penalty of Rs 1,000. Enter the PAN and Aadhaar numbers and click on Validate Aadhaar, you will be notified if you have to pay a penalty.

Then click on ‘Continue to Pay through e-Pay Tax’ and the steps to pay the penalty will be shown. You can pay the penalty accordingly and then come back to the e-filing website and link the PAN and Aadhaar.

Also Read: Aadhaar update, Bank Account, GST Slabs: Major changes from November 1