As the clock struck midnight on December 31, 2025, the deadline to link Permanent Account Number (PAN) with Aadhaar for a specific group of individuals has passed. But what does this mean for taxpayers in 2026? Here’s a breakdown of what you need to know.

The Deadline and Its Context

The Central Board of Direct Taxes (CBDT) had mandated that individuals who obtained their PAN using an Aadhaar Enrolment ID (AEID) before October 1, 2024, must link their PAN with their Aadhaar by December 31, 2025. This directive was specific to this group, and failing to meet this deadline renders their PAN inoperative from January 1, 2026.

Can You Still Link in 2026?

Yes, even though the deadline has passed, you can still link your PAN with your Aadhaar. However, there's a catch. After previous deadlines, including the one in June 30, 2023, a penalty of ₹1,000 has been levied for linking PAN and Aadhaar. This penalty remains in effect. By paying the penalty, individuals can reactivate their PAN.

Consequences of an Inoperative PAN

An inoperative PAN can lead to several disruptions in financial transactions and tax-related activities. Here’s what you might face:

• Tax Filing Issues: You will be unable to file your income tax returns (ITR). Any ITR submitted without a linked PAN may be considered invalid.
• Pending Refunds: The Income Tax Department will not process any pending refunds.
• Higher Tax Deductions: Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) will be deducted at a higher rate. The higher TDS rate applicable if PAN is not linked with Aadhaar is 20%.
• No TDS/TCS Credit: You will not be able to see your TCS/TDS certificates, and TDS/TCS credit will not be available on Form 26AS.
• Restrictions on Financial Transactions: An inoperative PAN can block tax filings, banking Know Your Customer (KYC), investments, and loan approvals. Transactions like opening a bank account, applying for a credit card, purchasing mutual funds, and making cash deposits exceeding ₹50,000 in a day may be restricted.
• Penalty for Using Inoperative PAN: Using an inoperative PAN can attract a penalty of ₹10,000 per transaction under Section 272B.

How to Link PAN and Aadhaar After the Deadline

If your PAN has become inoperative due to the missed deadline, here’s how you can reactivate it:

1. Visit the Income Tax e-filing portal.
2. Pay the Penalty: A late fee of ₹1,000 must be paid through the e-Pay Tax facility on the portal. Choose "₹500 Fee for delay in linking PAN with Aadhaar" under Minor Head.
3. Complete the Linking Process: After paying the penalty, complete the PAN-Aadhaar linking process online.
4. Wait for Activation: It usually takes 7 to 30 days for the status to change from 'Inoperative' back to 'Active'. During this period, higher TDS rates will continue to apply.

How to Check Your PAN-Aadhaar Link Status

It's crucial to verify whether your PAN and Aadhaar are linked. Here’s how you can check the status:

1. Visit the Income Tax e-filing portal.
2. Click on "Link Aadhaar Status": This option is available under the "Quick Links" section.
3. Enter Details: Enter your PAN and Aadhaar number.
4. View Status: The portal will display whether your PAN is linked to your Aadhaar.

Exemptions

It's important to note that not everyone is required to link PAN with Aadhaar. The following individuals are exempt:

• Non-Resident Indians (NRIs).
• Individuals who are not citizens of India.
• Individuals aged 80 years or above.
• Residents of Assam, Meghalaya, and Jammu & Kashmir.

In conclusion, while the December 31, 2025 deadline has passed, linking PAN with Aadhaar is still possible in 2026. Taxpayers need to pay a penalty of ₹1,000 to reactivate their PAN and avoid disruptions in financial and tax-related activities. Checking the linking status and completing the process is essential for a seamless financial experience.