PAN, TAN, linking of PAN and Aadhaar - Everything you need to know
India’s tax and identity infrastructure was once fragmented, manual, and vulnerable to misuse. Taxpayers were identified through the General Index Register (GIR) number — unique only within a local jurisdiction, not nationwide. This resulted in errors, duplicate records, and the absence of any centralised database.
To address this, the Permanent Account Number (PAN) was overhauled into a fully computerised, centralised system in 1995. The Tax Deduction and Collection Account Number (TAN) followed in the same year, introduced to track entities deducting or collecting tax at source.
PAN is a ten-character alphanumeric identifier issued to individuals, companies, firms, trusts, and all persons liable under tax laws. TAN is a ten-digit alphanumeric code issued exclusively to persons liable to deduct or collect tax at source. Both are issued by the Income Tax Department (ITD) and carry lifelong validity, but serve distinctly different purposes.
| Feature | PAN | TAN |
|---|---|---|
| Purpose | Financial identity of taxpayer (broader) | Tracks TDS/TCS (narrower) |
| Issued to | Individuals, companies, trusts | Persons liable to deduct/collect tax |
| Governed by | Section 262, ITA 2025 | Section 397, ITA 2025 |
PAN — Section 262, Income Tax Act 2025
PAN is governed by Section 262 of the Income Tax Act, 2025 — a tracking instrument designed to link all financial transactions of a taxpayer to a single identifier, preventing tax evasion and enabling effective oversight by ITD. The forms for applying are governed by Rule 158 of the Income Tax Rules, 2026.
TAN — Section 397, Income Tax Act 2025
TAN is mandated under Section 397. Every person liable to deduct or collect tax at source must obtain a TAN and quote it in all challans, quarterly statements, certificates, and prescribed documents.
Failure to obtain or correctly quote PAN attracts a penalty of ₹10,000 under Section 262, and the same amount for TAN, under Section 468. The applicable forms are ascertainable from Rule 216 of the Income Tax Rules, 2026.
1. How to Apply for PAN Online
Applications may be submitted through Protean (onlineservices.protean-tinpan.com), UTIITSL (pan.utiitsl.com), or the Income Tax e-Filing Portal (eportal.incometax.gov.in). Download the relevant form in advance to understand the documentation required.
2. PAN Application — Individuals, Companies, Firms, Trusts & Societies
Indian citizens, NRIs, and RNORs file Form 93; foreign individuals file Form 95. Indian companies, partnerships, trusts, and societies file Form 94, covering five parts — entity information, source of income, assessing officer details, representative assessee, and declaration. Non-individual foreign entities file Form 96.
3. PAN Correction Process
Corrections to name, date of birth, gender, photograph, or contact details are made via Form CSF on the Protean portal. Fee: ₹107 (physical card) or ₹72 (e-PAN). A 15-digit acknowledgement number is generated upon submission. Once processed, the updated e-PAN can be downloaded free of cost from the e-Filing Portal.
4. How to Link PAN with Aadhaar
Linking is done through the Income Tax e-Filing Portal. Unregistered users must furnish Aadhaar number, name, PAN, and mobile number, along with a ₹1,000 penalty via challan. Registered taxpayers may link directly through their Dashboard via OTP verification.
5. How to Apply for TAN
Government entities file Form 134; all others file Form 135. Government entities include Central and State Government bodies and local authorities, but exclude companies and statutory or autonomous bodies. Applications may be filed online or offline. Upon allotment, update all payroll, accounting, and compliance systems and ensure timely deduction, deposit, return filing, and certificate issuance.
From July 1, 2023, an unlinked PAN becomes inoperative. The consequences are far-reaching and affect everyday financial activity. Reactivation requires payment of ₹1,000.
- Inability to file Income Tax Returns (ITR)
- TDS at a higher rate of 20%
- Suspension of all pending refunds
- Restrictions on high-value banking transactions
- Inability to open demat accounts or invest in mutual funds
Justice K.S. Puttaswamy (Retd.) vs. Union of India [2018]
A five-judge Constitution Bench upheld the Aadhaar Act, 2016 as constitutionally valid by a 4:1 majority. The Court ruled that Aadhaar is mandatory for ITR filing and PAN allotment — but not for bank accounts, mobile connections, or school admissions.
Mohd. Abdullah Azam Khan v. State of Uttar Pradesh
In a landmark ruling on PAN misuse, a special court in Rampur convicted politician Azam Khan and his son Abdullah Azam for holding two PAN cards with different dates of birth.
- Both convicted and sentenced to seven years imprisonment
- Fined ₹50,000 each
- Additional Income Tax penalty of ₹10,000 imposed
What emerges is clear: these systems exist to serve the public interest, and any attempt to manipulate or override them will be met with serious legal consequences.
PAN, TAN, and Aadhaar are often viewed as mere formalities — forms to file, numbers to quote. But they represent India’s decades-long journey toward a transparent, accountable financial ecosystem. Compliance is not a burden — it is protection.
Do not wait for a notice to act; small errors, left unaddressed, become expensive problems. Everything is now digital and automated — making technological literacy a survival skill, not a choice. Know where your data goes, understand the platforms you use, and question what you sign digitally.
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