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Rule 162: Inoperative PAN, Aadhaar intimation and restoration

Rule 162 applies where a PAN holder was required to intimate Aadhaar under section 262(6) and failed to do so. It addresses the applicable fee, the period for PAN to become operative after compliant intimation, and specified refund and tax-deduction consequences while PAN is inoperative.

Official notified Income-tax Rules, 2026

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This article is for general information. Read the official Rules and applicable Act amendments, including the Taxation and Other Laws (Amendment) Act, 2026. If you need professional advice for your situation, contact Bizeneed.

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Rule 162 - When PAN becomes inoperative under section 262(6)

(1) If a person who had been allotted a Permanent Account Number (PAN) and was required to intimate his Aadhaar number under section 262(6), but failed to do so, then his Permanent Account Number being inoperative, he shall be liable for payment of fees in accordance with rule 158.

(2) Where the person referred to in sub-rule(1) has intimated his Aadhaar number under section 262(6), after payment of fees in accordance with rule 158, his Permanent Account Number shall become operative within thirty days from the date of intimation of Aadhaar number.

(3) A person, whose Permanent Account Number has become inoperative under sub-rule(1), shall be liable for the following consequences for the period commencing from the date of commencement of this rule till the date it becomes operative: — (a) refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made; (b) interest shall not be payable on such refund for the period, beginning with the date of commencement of this rule and ending with the date on which it becomes operative; (c) where tax is deductible or collectible at source under Chapter XIX-B in case of such person, such tax shall be deducted or collected, as the case may be, at higher rate, in accordance with provisions of section 397(2);

(4) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall specify the formats and standards along with the procedure for verifying the operational status of Permanent Account Number under sub-rules (1) and (2).

Rule breakdown

First establish whether Aadhaar intimation was required

The trigger is not simply possession of PAN: the person must have been required to intimate Aadhaar under section 262(6) and failed to do so.

Check the current Act’s applicability and notified exemptions before concluding that a particular person’s PAN should be inoperative.

Complete intimation with the applicable fee

The rule refers to the fee in Rule 158. After the required Aadhaar intimation following fee payment, PAN becomes operative within thirty days from the intimation date.

Retain both the payment and intimation evidence. Payment alone is not the complete event described by sub-rule (2), and the rule does not promise immediate same-day restoration.

Refund and refund-interest consequences

While the stated consequences apply, the tax refund is not made and refund interest is not payable for the specified inoperative period.

The rule addresses the timing and interest consequence; it should not be described as automatically cancelling the underlying refund entitlement permanently.

Higher deduction or collection requires the current Act analysis

The quote provides for higher tax deduction or collection under the stated Chapter and statutory cross-reference. Check the applicable current section 397 provisions and the transaction rather than assigning one universal percentage to every receipt.

Preserve the deduction or collection record and obtain advice on the correct treatment where the PAN’s operational status changes.

Verify operational status after intimation

Systems specifies the formats and procedure for checking whether PAN is operative. Use the current official status-verification channel and retain the result.

If records do not update as expected, keep the acknowledgments and use the authorised support or correction process rather than making another unsupported assumption about status.

Key takeaways

Requirement must apply

Check the parent Aadhaar-intimation obligation and exemptions.

Within thirty days

The restoration period follows compliant intimation after the applicable fee.

Temporary status has consequences

Refund, interest and withholding treatment require attention.

No universal higher rate

Apply the current Act to the relevant transaction.

Practical checklist

  • Check whether intimation is legally required.
  • Retain fee and intimation acknowledgments.
  • Verify status through the official process.
  • Review refund and withholding consequences.

Avoid

  • Do not equate fee payment alone with completed intimation.
  • Do not promise immediate restoration or a universal deduction rate.

FAQs

Does paying the fee alone guarantee immediate restoration?

The rule links restoration within thirty days to Aadhaar intimation after fee payment, not fee payment alone or immediate same-day action.

Does every PAN holder fall within this rule regardless of Aadhaar exemptions?

No. Its trigger requires the person to have been required to intimate Aadhaar under the cited provision.

Is the underlying refund permanently cancelled?

The rule states that refund is not made during the specified status and provides an interest consequence; it does not say the underlying entitlement is permanently cancelled.

What higher rate applies to every transaction?

There is no single percentage stated in this rule; apply the relevant current statutory provisions to the transaction.

Glossary

Inoperative PAN
The PAN status addressed by this rule following failure to make the required Aadhaar intimation.

Official sources