Taxpayers across India face a critical deadline of December 31, 2025, to link their Permanent Account Number with Aadhaar, as mandated by a recent Central Board of Direct Taxes notification issued on April 3, 2025. This requirement specifically applies to individuals whose PAN was allotted using an Aadhaar enrolment ID prior to October 1, 2024, and must now be updated with the final Aadhaar number. Failure to comply will render the PAN inoperative starting January 1, 2026, triggering significant restrictions on financial and tax-related activities.

An inoperative PAN carries severe consequences, including inability to file income tax returns, delayed or blocked refunds, and mandatory higher rates of Tax Deducted at Source or Tax Collected at Source. Financial institutions such as banks, mutual funds, and stock brokers may suspend services due to incomplete Know Your Customer norms, while submissions of forms like 15G and 15H for TDS exemption could be rejected outright.

The CBDT has clarified that taxpayers completing the linkage within the extended timeline will incur no additional penalty. However, those who missed previous deadlines—initially June 30, 2023, and later May 31, 2024—remain liable for a Rs 1,000 late fee under Section 234H of the Income Tax Act, unless already settled.

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Linking PAN with Aadhaar remains a straightforward online procedure accessible via the Income Tax e-filing portal. Authorities recommend verifying the current status promptly and ensuring Aadhaar records, particularly registered mobile numbers, are up to date to facilitate seamless validation through One-Time Password authentication.

With only days remaining before the cutoff, tax experts urge immediate action to prevent disruptions in routine transactions and avoid potential financial complications in the new year. Compliance ensures uninterrupted access to essential tax and banking services.