PAN-Aadhaar Linking: The complete truth about the December 31, 2025 deadline and the ₹1000 fee - who will be exempt from the penalty?

Several misconceptions are spreading on social media regarding PAN and Aadhaar linking. People believe that linking is free until December 31, 2025. However, the truth is that a late fee of ₹1000 is already applicable for most people since July 1, 2023. The December 31, 2025, deadline only applies to those who obtained their PAN using their Aadhaar enrollment ID before October 1, 2024. For them, linking is free until this date.

For others, their PAN has already become inoperative. Therefore, if you haven't linked, you won't receive refunds, more TDS will be deducted, and you will face banking difficulties. The Income Tax Department has clearly stated that linking should be done on time. So, let's understand the new rules and what to do in simple terms.

What is the real deadline? Penalty already applicable for most

According to the Income Tax Department, the free deadline for PAN-Aadhaar linking was June 30, 2023. A late fee of ₹1000 has been applicable since July 1, 2023. The April 2025 notification only provided relief to one group: those who obtained their PAN using their Aadhaar enrollment ID before October 1, 2024. For them, linking is free until December 31, 2025.  Others were required to link by paying ₹1000 earlier, and they can still do so, but the fee will apply.

Who is exempt from the ₹1000 fee?
Only one group is exempt: those whose PAN was created using their Aadhaar enrollment ID before October 1, 2024. These individuals can link for free until December 31. Other exemptions include: residents of Assam, Meghalaya, and Jammu and Kashmir, senior citizens above 80 years of age, and non-citizens. NRIs are also exempt in some cases, and everyone else will have to pay ₹1000.

What happens if PAN and Aadhaar are not linked?
After December 31, 2025, unlinked PANs will become inoperative. Tax refunds will not be issued.
TDS/TCS will be deducted at a higher rate of 20%.
You will not be able to open a new bank account or an FD.
Cash transactions exceeding ₹50,000 will not be possible.
Investments in mutual funds or shares will be stopped.
PAN is not cancelled permanently, but it will have to be reactivated later by paying ₹1000.

How to link: Step-by-step guide
Go to the e-Filing portal www.incometaxindia.gov.in.
Click on 'e-Pay Tax'.
Enter your PAN, verify with OTP.
Select Assessment Year 2025-26.
Select 'Other Receipts (500)' and make a payment of ₹1000 (this does not apply to those who are exempt).
After 4-5 days of payment, go to 'Link Aadhaar'.
Enter your PAN and Aadhaar number.
Match your name and date of birth.
Confirm with OTP.
If there is a difference in the name, correct your Aadhaar or PAN first.
Advice: Link soon, avoid penalties.

Please note that December 31st is the last chance for the exempt group; others should link their PAN and Aadhaar earlier to save on fees.  Also, an inactive PAN will cause further problems. The Income Tax Department has advised linking on time. (Note: This news is based on general information; for more details, please consult a financial advisor.)

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