PAN-Aadhaar link deadline today: What will happen if your PAN becomes inoperative?

As the PAN Aadhaar link deadline of December 31, 2025 is today, if you miss this window, your PAN card will become inoperative. After that, it can trigger a chain reaction, forcing you to pay higher taxes and leading to freezing your welfare benefits. Read more to know what will happen if your PAN becomes inoperative.

Higher TDS and TCS rates

Under normal circumstances, your bank or employer deducts a standard rate of TDS (Tax Deducted at Source). However, once your PAN card becomes inoperative, the law treats you as if you haven't provided a PAN at all and will charge TDS or TCS at a higher rate.

The 20% tax deduction

For most payments, such as interest on fixed deposits or dividends, the TDS rate skyrockets if your PAN card is inoperative. Instead of the usual 10%, you will be charged a flat 20% deduction. For salaried individuals, an inoperative status could mean that your employer is forced to deduct tax at the highest applicable slab rate.

Doubling down on TCS

Similarly, the rate increases dramatically for TCS (Tax Collected at Source), which is typical when purchasing expensive cars or spending money on international travel. It usually puts an immediate strain on your liquid cash because it is either 5% or double the regular rate, whichever is higher.

Also read: From 8th Pay Commission to IRCTC booking window: Major January 2026 changes for employees, pensioners, taxpayers

What happens when you have an inoperative PAN card?

• TDS/TCS credits will not reflect in your Form 26AS until your PAN becomes operative.
• Deductors may not be able to issue valid TDS certificates.
• You lose the right to submit Form 15G or 15H to stop TDS on interest income, even if your total income is below the taxable limit.
• Frozen refunds and penalty

The Income Tax Department has been clear: no linking, no refunds. If your PAN is inoperative, any tax refunds will be put on hold. Furthermore, you will not receive any interest on that refund for the period it remains stuck due to your inoperative PAN status.

How to reactivate PAN after it becomes inoperative

If you miss the PAN-Aadhaar link deadline, you can still fix it, but it will cost you. Here is what to do to activate PAN, as per the Protean website.
Pay Rs 1,000 fine
A late fee of Rs 1,000 must be paid through the e-Pay tax facility on the official portal. Once the penalty is paid, the PAN-Aadhaar link process can be completed.
It typically takes 7 to 30 days for the status to change from ‘Inoperative’ back to ‘Active.’ During this waiting period, higher TDS rates will continue to apply.