Why in news?
31 December 2025 was the last date for individuals to link their PAN (Permanent Account Number) with Aadhaar and to file belated or revised income‑tax returns for the assessment year 2025‑26. The Income Tax Department warned that PANs not linked by this date would become inoperative from 1 January 2026, affecting banking and tax compliance.
Background
Section 139AA of the Income‑tax Act mandates that every person who has been allotted a PAN must link it with their Aadhaar number. The government has repeatedly extended the deadline to accommodate taxpayers, but emphasised that failure to link by the end of 2025 would result in the PAN becoming inactive. An inactive PAN cannot be quoted for filing returns or conducting financial transactions such as opening bank accounts or investing in securities.
Key points
- Consequences of non‑linking: From 1 January 2026 an unlinked PAN will be treated as inoperative. The holder will not be able to file income‑tax returns, claim tax refunds or undertake high‑value transactions that require PAN quoting.
- Penalty for late linking: Taxpayers who miss the deadline may still link their PAN with Aadhaar after paying a fee of ₹1 000 through the income‑tax portal. Once linked, the PAN becomes operative again.
- Exemptions: Non‑resident Indians, individuals aged 80 and above, residents of Assam, Meghalaya and Jammu & Kashmir, and minors who do not have an Aadhaar card are exempt from the linking requirement.
- Belated or revised ITR: 31 December 2025 was also the last date to submit belated returns or revise previously filed returns for the 2024‑25 financial year. After this date, taxpayers cannot file or amend returns for the period.
- Linking procedure: Taxpayers can link their PAN and Aadhaar by logging into the Income Tax Department’s e‑filing portal, entering the two numbers and paying the applicable fee if overdue.
Why it matters
- Ensuring compliance: Linking helps the government curb tax evasion and duplicate PANs by uniquely identifying taxpayers.
- Continuity of financial services: An operative PAN is required for opening bank accounts, buying property, investing in mutual funds and many other transactions. Linking therefore prevents disruptions.
- Avoiding penalties: Meeting the deadline helps individuals avoid the ₹1 000 late‑linking fee and potential complications with income‑tax refunds.
Source: The Economic Times
