PAN to Become Inoperative From April 1: Anushka Rathod Breaks Down Key Changes

Starting April 1, major changes are coming for anyone who has not linked their PAN with Aadhaar, and the impact is far more serious than most people assume. Finance influencer Anushka Rathod breaks down what these new rules mean for your tax filings, refunds, and TDS deductions.

According to the latest Draft Income-tax Rules, PAN cards that remain unlinked will officially become “inoperative”, leading to immediate restrictions on tax‑related services. Once inoperative, your PAN will not function for key financial processes, and reactivation can take up to 30 days after you link Aadhaar and pay the prescribed fee. 

What Happens When Your PAN Becomes Inoperative:

The consequences of an inoperative PAN have now been clearly defined in the updated rules:

No tax refunds will be issued during the period your PAN remains inoperative. 

No interest will be paid on any refunds due for the entire time your PAN is inactive. 

Higher TDS or TCS will automatically apply, as tax will be deducted at elevated rates under Section 397(2) of the proposed framework and aligned provisions.

This means that even if excess tax is cut from your salary or fixed deposits, the refund won't be processed until your PAN becomes operative, and you lose interest for the blocked duration.

These rules reinforce the government's long‑standing requirement for PAN–Aadhaar linkage, similar to earlier mandates under Rule 114AAA and related circulars. 

How to Reactivate an Inoperative PAN:

If you miss the deadline and your PAN becomes inoperative, you can revive it only after:

Linking Aadhaar through the official IT portal

Paying the required fee, which currently stands at ₹1,000

Waiting up to 30 days for reactivation after submitting details.

Until reactivation, all tax‑related actions remain on hold, and higher TDS/TCS provisions continue to apply.

Why This Matters for You:

These changes tighten compliance significantly. Missing the deadline can delay refunds, reduce interest benefits, and increase tax outflow. For salaried individuals, investors, and freelancers, the impact is direct and financial.

With more rule updates expected, Anushka Rathod advises completing the linkage immediately to avoid unnecessary penalties, delays, and cash‑flow issues.

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