Mandatory Aadhaar OTP verification enforced by Income Tax Department for modifications of these details on e-filing platform
As of 2025, the Central Board of Direct Taxes (CBDT) has introduced new rules regarding the linking of Aadhaar with Permanent Account Number (PAN) for existing taxpayers in India. Here are the key aspects:
- **Mandatory Linking for Existing PAN Holders:** Existing PAN cardholders are required to link their PAN with Aadhaar by **December 31, 2025**. Failure to comply will result in the PAN becoming inoperative from January 1, 2026, impacting activities like filing income tax returns, accessing bank accounts, and participating in high-value financial transactions.
- **Penalty for Non-Linking:** Individuals who have not linked their PAN with Aadhaar by the deadline can still link it by paying a penalty of Rs.1,000.
- **Exemption for PANs Issued Using Aadhaar Enrolment ID:** Individuals who received their PAN on or before October 1, 2024, using an Aadhaar enrolment ID, can link their PAN and Aadhaar by December 31, 2025, without any penalty.
## How to Link Aadhaar with PAN
To link Aadhaar with PAN online, follow these steps:
1. **Visit the Income Tax e-filing Portal:** Go to the official website of the Income Tax Department e-filing portal at https://www.incometax.gov.in/iec/foportal/
2. **Enter Basic Information:** Provide your PAN and Aadhaar number.
3. **Validate with OTP:** Validate your Aadhaar number using an OTP sent to your linked mobile number.
4. **Submit Request:** After validation, submit the request to link your PAN and Aadhaar.
## Impact of Not Linking
Failure to link Aadhaar with PAN by the deadline can lead to several issues, including:
- **Inoperative PAN:** The PAN will become inoperative, affecting financial transactions and government benefits. - **Tax Filing Issues:** Inability to file income tax returns. - **Bank Account Restrictions:** Potential blocking of bank accounts where PAN is required for KYC.
These measures aim to enhance compliance and transparency in tax filing processes. Starting from now, an Aadhaar number is mandatory for PAN applications. The purpose of this change is to curb tax evasion, fake PAN cards, and strengthen digital Know Your Customer (KYC) procedures.
It is now necessary to provide an Aadhaar number and get it authenticated to get a new Permanent Account Number (PAN). According to a CBDT official, the verification of Aadhaar-related information will ensure that a person has only one valid PAN in their name. This move is intended to prevent unauthorized changes to one's profile with the Income Tax Department.
A PAN application will be considered valid only when the applicant's Aadhaar number is registered and it is confirmed online, under the Central Board of Direct Taxes (CBDT) new rule. This change supports the government's "Digital India" and "e-governance" initiative.
- The new rules introduced by the CBDT in 2025 will require individuals engaged in business and financial activities to link their Aadhaar with their PAN, impacting their participation in high-value transactions and access to bank accounts, as well as their ability to file income tax returns.
- With the increasing role of technology in business and finance, the linking of Aadhaar with PAN can be seen as a step towards strengthening digital Know Your Customer (KYC) procedures, enhancing compliance, and curbing tax evasion, in line with the government's "Digital India" and "e-governance" initiative.
