Big Tax Alert: ₹10,000 Penalty for Transactions Using Inactive PAN Not Linked to Aadhaar

The Income Tax Department has initiated strict action against individuals using PAN cards that are not linked with Aadhaar. If you're still using an unlinked PAN card for financial transactions, be prepared to pay a penalty of ₹10,000 per transaction under Section 272B of the Income Tax Act.

This measure is part of the government's effort to enhance transparency in the financial system and curb tax evasion.

Linking PAN with Aadhaar is Mandatory

The government has made it compulsory to link your PAN (Permanent Account Number) with Aadhaar. If you fail to do so within the stipulated deadline, your PAN becomes inactive, rendering it unusable for most financial and taxation purposes.

Inactive PAN means:

• You cannot file your income tax return

• You cannot open or operate a bank account

• You are ineligible to invest in mutual funds, stock markets, or buy property

• You cannot apply for loans or credit services

Financial Transactions That May Attract Penalty

If you continue using an unlinked or inactive PAN card for the following activities, you may be fined ₹10,000 for each instance:

• Opening or managing a bank account

• Investing in mutual funds or stock market

• Purchasing property

• Applying for loans

• Filing income tax returns

Such penalties fall under Section 272B of the Income Tax Act, which penalizes the use of invalid or incorrect PAN for official and financial activities.

Inactive PAN Cards Under the Radar

The Income Tax Department has already warned that PAN cards not linked with Aadhaar by the deadline will be marked as inactive. The government has also intensified monitoring of duplicate or multiple PAN cards held by a single individual, which is a violation.

Additionally, Aadhaar-PAN linking helps eliminate fraudulent or duplicate identities, improving tax compliance and reducing corruption.

AI and Data Analytics Now in Use

To tighten the noose around tax violators, the tax department is now leveraging Artificial Intelligence and data analytics tools. These technologies detect:

• Transactions made using inactive PANs

• Mismatches in ITR filings

• Fraudulent refund claims

• Unusually high financial movements

Through real-time tracking, the department can immediately flag and penalize violations.

What Taxpayers Must Do Immediately

If you haven't linked your PAN with Aadhaar yet, take urgent action to avoid fines or suspension. Here's how you can do it:

1. Visit the official Income Tax e-filing portal: https://www.incometax.gov.in

2. Log in or register using your PAN and other credentials.

3. Navigate to the 'Link Aadhaar' section.

4. Enter your Aadhaar number and verify details.

5. Submit the request and complete OTP-based authentication.

If you're unsure whether your PAN is linked or not, the portal also provides an option to check Aadhaar-PAN link status.

Consequences of Inaction

Failure to link your PAN with Aadhaar can result in:

• Freezing of your PAN

• Inoperable bank and demat accounts

• Inability to file ITRs or claim refunds

• Heavy penalties on future transactions

Conclusion

The Income Tax Department is now cracking down harder on non-compliant PAN holders. Avoid penalties and inconvenience by ensuring that your PAN is linked with Aadhaar immediately. With AI surveillance and legal provisions in place, even a single non-compliant transaction could cost you ₹10,000 — so act fast and stay safe financially.