ITR
Refund stopped because PAN is inoperative
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Facts
Under CBDT Circular 03/2023, no refund is paid and no interest on refund is allowed while the PAN is inoperative. Once the PAN becomes operative after linking, the refund can be issued.
Provisions and law
- Sec 139AA, Income-tax Act 1961 (now Sec 262, Income-tax Act 2025)PAN holders must intimate Aadhaar; an unlinked PAN becomes inoperative
- CBDT Circular No. 03 of 2023From 1 July 2023 an inoperative PAN gets no refund, no interest on refund, and higher TDS and TCS
- Sec 244A, Income-tax Act 1961 (now Sec 437, Income-tax Act 2025)Interest on refund, generally 0.5% a month or part of a month
Analysis
Interest on refund is not paid for the period the PAN stays inoperative. Example: an AY 2025-26 refund of ₹22,000 was held because the PAN was not linked; after paying ₹1,000 and linking, the refund is processed, but interest for the inoperative months is lost. Raise a refund reissue request if the status says failed.
Conclusion
- Link PAN and Aadhaar after paying the fee
- Wait for the PAN to show operative
- Check refund status on the portal
- Raise a refund reissue request if needed
A Savvy can do this for you
PAN-Aadhaar linking with late fee, Sec 262 and 430 (old 139AA and 234H)
₹499
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