Why is it must to link Aadhaar by Dec 31 with PAN issued via enrolment ID

This mandate is for individuals who applied for PAN using Aadhaar Enrolment IDs, but did not have Aadhaar numbers at the time of application

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The Income Tax Department has released a new directive affecting several PAN card holders in India. If you obtained your Permanent Account Number (PAN) using an Aadhaar Enrolment ID—a unique 28-character alphanumeric code assigned during an Aadhaar application—you must now update your PAN with your actual Aadhaar number. This update must be completed by December 31, 2025 to ensure uninterrupted access to tax filings and financial services.

 

“In exercise of the powers conferred by sub-section (2A) of section 139AA of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that every person who has been allotted permanent account number on the basis of Enrolment ID of Aadhaar application form filed prior to the 1st day of October 2024, shall intimate his Aadhaar number to the Principal Director General of Income tax (Systems) or Director General of Income-tax (Systems) or the person authorised by the said authorities on or before the 31st day of December, 2025 or such date as may be specified by the Central Board of Direct Taxes in this behalf,” according to the notification.

 

Why is this necessary? 

The government aims to strengthen identity verification and streamline tax compliance through this initiative. Linking PAN with Aadhaar helps prevent tax evasion and ensures accurate taxpayer records. The move aligns with broader efforts to integrate India's financial and taxation systems with digital identity infrastructure.

 

Consequences of not updating aadhaar on time

 

Failing to update your Aadhaar number within the given deadline can lead to several issues:

 

PAN card may become inactive: Your PAN could be deactivated, making it unusable.

 

Unable to file Income Tax Return (ITR): You won’t be able to file your ITR without a linked and active PAN.

 

Banking and financial transaction issues: Operating bank accounts and conducting financial transactions may become difficult.

 

Obstacles in investments and property deals: You could face delays or restrictions while investing or during the purchase/sale of property.

 

How to update your Aadhaar number with the tax department

 

Go to the official Income Tax e-filing portal.

Log in with your PAN credentials.

Click on the ‘link Aadhaar’ option.

Enter your 12-digit Aadhaar number.

Verify the details using the OTP sent to your mobile number registered with Aadhaar.

Submit the request and wait for the confirmation message.

 

Penalty for linking PAN with Aadhaar

 

Currently, there is a penalty for linking PAN with Aadhaar, as the deadline for general PAN holders to do so was June 30, 2023. If you haven’t linked the two yet, you will need to pay a fee to complete the process.  Calculate Income Tax: Income Tax Calculator Tool

 

However, individuals who received their PAN using only an Aadhaar Enrolment ID didn’t have an actual Aadhaar number at the time. Since they were unable to meet the June 30, 2023 deadline due to this, it is reasonable to expect that they should be exempt from the penalty now. This exemption acknowledges that they were not in a position to complete the linking earlier.