The Central Board of Direct Taxes (CBDT) has issued Circular No. 9/2025, updating the framework related to inoperative Permanent Account Numbers (PANs). This clarification aims to help taxpayers understand the consequences of not linking PAN with Aadhaar and the procedures to restore PAN functionality.
According to the circular, if an individual fails to link their PAN with Aadhaar under Section 139AA of the Income Tax Act, the PAN becomes inoperative from the effective date. This inoperability does not cancel the PAN but limits its usability for financial and tax-related transactions.
Key Highlights of the Revised Circular
Inoperative PANs are still valid for record purposes but cannot be used for tax filings, refunds, or other official verifications.
No new tax credits or refunds will be processed unless PAN is made operative again.
TDS/TCS deductions during the period when PAN is inoperative will attract higher rates under Section 206AA or 206CC, as applicable.
Once Aadhaar is successfully linked, PAN becomes active from the date of linkage, and normal provisions resume.
The circular also advises diductors and collectors to treat such PANs as inoperative until restored, and file tax returns accordingly.
Who Is Affected?
This rule applies to:
Individuals who missed the PAN-Aadhaar linking deadline
Entities using PANs of such individuals for tax compliance
Taxpayers expecting refunds or processing high-value financial transactions
