Is PAN-Aadhaar linking mandatory? What happens if I don't link them?

Yes, linking PAN with Aadhaar is mandatory for all individuals who hold both. The deadline has been extended multiple times, but failure to link now has real financial consequences.

Current status (FY 2025-26):

If your PAN is not linked with Aadhaar, it becomes inoperative. This means it is treated as if you do not have a PAN.

Consequences of an inoperative PAN:

• Higher TDS/TCS: TDS is deducted at double the rate or 20%, whichever is higher (Section 206AA). For example, FD interest TDS jumps from 10% to 20%.
• Cannot file ITR: You cannot file your income tax return with an inoperative PAN.
• Cannot receive refunds: Any pending refund will not be processed until PAN is reactivated.
• No financial transactions: You cannot open new bank accounts, purchase mutual funds above ₹50,000, buy/sell property above ₹10 lakh, or make cash deposits above ₹50,000.
• Interest on refunds stops accruing during the period PAN is inoperative.

How to link PAN with Aadhaar:

• Online: Visit incometax.gov.in > Quick Links > Link Aadhaar. Enter PAN, Aadhaar number, and name as per Aadhaar.
• SMS: Send UIDPAN <12-digit Aadhaar> <10-digit PAN> to 567678 or 56161.
• Fee: A late linking fee of ₹1,000 applies (paid via e-Pay Tax on the portal under "Other Receipts").

Timeline after payment:

• After paying the fee and submitting the linking request, it typically takes 15-30 days for PAN to become operative again.
• The linking is validated against your Aadhaar details. If your name, date of birth, or gender does not match, the linking will fail. Update either your PAN or Aadhaar records first.

Who is exempt from linking:

• NRIs (Non-Resident Indians)
• Persons above 80 years of age (super senior citizens)
• Residents of Assam, Meghalaya, and Jammu & Kashmir
• Foreign citizens

Check your linking status: Visit incometax.gov.in > Quick Links > Link Aadhaar Status. Enter PAN and Aadhaar number to verify.

Pro tip: Even if your PAN was made inoperative, all TDS deducted during that period still counts. Once you reactivate and file your ITR, you can claim credit for all TDS deducted.