Linkage of tax ID (PAN) with Aadhaar

Digital ID is used to verify and uniquely link Permanent Account Number (PAN) to Aadhaar, which creates a unified tax identification system. Operational since 2017 and made mandatory in 2019 (with extensions), the Income Tax Department, in collaboration with the UIDAI, requires all PAN holders to link their PAN with their Aadhaar number. PAN is a 10-character alphanumeric identifier issued by the Income Tax Department to track financial transactions and tax compliance, while Aadhaar provides a biometric-based unique identity. The PAN-Aadhaar linkage serves to eliminate duplicate and fake PAN cards, ensure unique tax identification, and enable cross-verification of taxpayer information.

Taxpayers can link their PAN with Aadhaar through multiple channels, which include the Income Tax e-filing portal, SMS to a designated number with their PAN and Aadhaar details, or PAN-Aadhaar linking facilities at banks and service centers. As of January 2024, more than 510 million PANs have been successfully linked with Aadhaar. The Income Tax Act was amended to make PAN-Aadhaar linking mandatory. Unlinked PANs became inoperative, which means they cannot be used for financial transactions, such as opening bank accounts, purchasing property, or filing income tax returns. The PAN-Aadhaar linkage system has strengthened India’s tax administration. It eliminated duplicate and bogus PAN cards estimated in millions, which enabled the detection of tax evasion through the identification of individuals who hold multiple PANs. The system supported the government’s efforts to expand the tax base and improve compliance, which facilitated seamless verification of taxpayer identity across financial and tax systems, reduced identity fraud in high-value financial transactions that require PAN, and created a strong, unique taxpayer identification infrastructure that integrates India’s tax and identity ecosystems.