Income-Tax Bill 2025: What does the new bill say about PAN-Aadhaar rules?

Finance Minister Nirmala Sitharaman on Thursday (February 13, 2025) introduced the Income-Tax Bill 2025 in Lok Sabha. This new bill will replace the outdated Income Tax Act of 1961 and establish the new Income Tax Act of 2025, which is expected to be effective by April 2026.

The Income-Tax Bill 2025 has simplified several rules concerning the Permanent Account Number (PAN) and Aadhaar Card that taxpayers should be aware of. 

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When is Aadhaar mandatory?

Under the new bill, individuals who are eligible to obtain an Aadhaar number must provide it when applying for a PAN and filing their income tax return (ITR).

Furthermore, individuals who have a PAN and are eligible for an Aadhaar number must inform the income tax authority of their Aadhaar number in the prescribed format.

Failure to provide an Aadhaar number will result in the PAN of the individual becoming inactive.

"Every person who is eligible to obtain Aadhaar number shall quote such number in the application form for allotment of Permanent Account Number and in the return of income," the bill says.

When is PAN mandatory?

Every individual is required to mention their Permanent Account Number (PAN) in all income tax returns, correspondence with any income-tax authority, and on all challans for payment under the Income Tax Act 2025.

Notification of Address Change

It is mandatory for every individual to inform the assessing officer of any changes in their address, name, or business details that were used for their PAN allocation.

Substitution of Aadhaar for PAN

If an individual has not been allocated a PAN, they can provide their Aadhaar number when required. Even if they already have a PAN, they can choose to quote their Aadhaar number instead, as long as they have informed the tax authority of this change.

Who is required to obtain a PAN?

According to the latest legislation, an individual must acquire a PAN if they meet any of the following criteria:

Their total income or the total income of any other individual for whom they are assessable in any tax year exceeds the basic exemption limit;
They are engaged in a business or profession with total sales, turnover, or gross receipts that have exceeded or are likely to exceed ₹5 lakh in any tax year;
They are obligated to file a return of income under section 263 for a specific tax year;
They are a resident, excluding an individual, and engage in a financial transaction of ₹2.5 lakh or more in a tax year;
They hold a position such as managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer, or office bearer of the entity indicated in point 4, or any person authorized to act on behalf of said entity.

Furthermore, it is not permitted for an individual to apply for, acquire, or own multiple PANs if they already possess one.