CBDT Issues Relief for PAN-Aadhaar Non-Linkage: Key Highlights

The Central Board of Direct Taxes (CBDT) has issued an important update for taxpayers and deductors concerning the implications of PAN becoming inoperative due to non-linkage with Aadhaar. Circular No. 9/2025, released on July 29, 2025, addresses common concerns regarding higher rates of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) in such cases.

What’s Changing?

Many deductors and collectors recently received notices about short deductions or collections because their deductees’ or collectees’ PAN numbers had become inoperative.

No Higher TDS/TCS for Eligible Cases:

• Between April 1, 2024, and July 31, 2025: If PAN was inoperative but becomes operative by linking it with Aadhaar on or before September 30, 2025, then there will be no liability to deduct or collect tax at higher rates under Sections 206AA/206CC.
• On or after August 1, 2025: If PAN is made operative within two months from the end of the month in which payment or credit is made, the higher TDS/TCS rates will not apply.

Continued Compliance Essential
It’s important to note that other provisions of the Income Tax Act concerning TDS/TCS will continue to apply as usual, regardless of this relief.