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PAN Penalty Calculator India — TDS 206AA, 272B & Aadhaar Link FY 2025-26

Calculate excess TDS when PAN is missing (Section 206AA at 20%), Section 272B penalty of ₹10,000 for specified transactions, PAN transaction requirements under Rule 114B, and the cost of not linking PAN to Aadhaar. Section 206AB abolished from FY 2025-26. Updated for FY 2025-26.

Calculate TDS impact when PAN is missing or invalid
Select the type of payment. TDS rate varies by section.
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The amount on which TDS is being deducted
Select the type of financial transaction for Section 272B penalty assessment
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How to Use This Calculator

PAN Penalty Check tab

Select the transaction type (FD interest, professional fee, rent, property sale, etc.) and enter the amount. The calculator shows TDS with a valid PAN vs without PAN under Section 206AA (20% rate). It also calculates the Section 272B penalty of ₹10,000 for not quoting PAN in specified financial transactions. Use the advanced option to select the specific transaction type for 272B assessment.

Aadhaar-PAN Link tab

Select whether your PAN is linked to Aadhaar. If not linked, your PAN has been inoperative since 1 July 2023. Enter your FD interest, rent income, and professional fees to see how much excess TDS you are losing annually at 20% instead of normal rates. The calculator shows the total cost of NOT linking, including the ₹1,000 late linking fee.

PAN Transaction Requirements tab

Select the financial transaction type (property purchase, vehicle, FD, etc.) and enter the transaction value. The calculator checks whether PAN is mandatory for this transaction under Rule 114B (based on value thresholds) and calculates the Section 272B penalty of ₹10,000 per default for not quoting PAN. Use this to assess your total penalty exposure across multiple transactions.

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The Formula

PAN-related penalties involve three distinct sections of the Income Tax Act, each with its own rate and applicability.

Section 206AA — TDS Without PAN:
TDS Rate = higher of (applicable rate, rate in force, 20%)
Excess TDS = (206AA rate − normal rate) × payment amount

Section 272B — PAN Penalty:
Penalty = ₹10,000 per default
Applies to: specified transactions under Rule 114B

Section 139A / Rule 114B — PAN Transaction Requirements:
Specified transactions require mandatory PAN quoting
Penalty (Section 272B) = ₹10,000 per default
Thresholds: property/FD/shares > ₹10L, cash/forex/MF > ₹50K, vehicle & cards at any value

PAN-Aadhaar Late Linking Fee (Section 234H):
Fee = ₹1,000 (one-time)
Consequence of not linking: PAN becomes inoperative → treated as no PAN → 206AA applies

When PAN is inoperative (not linked to Aadhaar), it is treated as if no PAN was furnished. This triggers Section 206AA on all TDS payments, not just specified transactions.

Example

Rajesh — Salaried employee with FD interest, PAN not linked to Aadhaar

Rajesh has ₹5,00,000 in Fixed Deposits earning 8% interest (₹40,000 p.a.). His PAN is not linked to Aadhaar, making it inoperative since July 2023.

Step 1: TDS on FD Interest with Active PAN

FD interest (annual)₹40,000
Normal TDS rate (Section 194A)10%
TDS deducted₹4,000
Interest received in hand₹36,000

Step 2: TDS on FD Interest with Inoperative PAN

FD interest (annual)₹40,000
TDS rate without PAN (Section 206AA)20%
TDS deducted₹8,000
Interest received in hand₹32,000

Step 3: Total Cost to Rajesh

Excess TDS (20% − 10%)₹4,000
Aadhaar link late fee₹1,000
Cannot file ITRYes — refund blocked
Total annual cost₹5,000

Rajesh loses ₹4,000 in excess TDS that he cannot claim back (because he can't file ITR with inoperative PAN). By linking PAN to Aadhaar for ₹1,000, he saves ₹4,000 every year and can file ITR to get refunds.

Complete PAN Penalty Rate Card — FY 2025-26

▶ Section 206AA — TDS Rates Without PAN
Payment Type Normal Rate 206AA Rate Excess
FD Interest (194A) 10% 20% +10%
Professional Fee (194J) 10% 20% +10%
Rent — Land/Building (194I) 10% 20% +10%
Contractor Payment (194C) 2% 20% +18%
Commission (194H) 5% 20% +15%
Property Sale (194IA) 1% 20% +19%
Lottery/Winnings (194B) 30% 30% 0% (already ≥20%)

Rule: 206AA rate = higher of (applicable rate, 20%). For lottery at 30%, 206AA doesn't increase the rate.

▶ Section 206AB — Abolished from FY 2025-26

Section 206AB has been abolished with effect from 1 April 2025 by the Finance Act 2025 (Finance Bill Clauses 66 & 68). It no longer applies for FY 2025-26 onwards.

Previously (FY 2021-22 to FY 2024-25), Section 206AB mandated higher TDS at the rate of twice the normal rate or 5%, whichever was higher, for “specified persons” who had not filed ITR for 2 preceding years and had TDS/TCS exceeding ₹50,000 in each year. The corresponding TCS provision (Section 206CCA) has also been abolished.

Impact: Payers no longer need to check the compliance portal for specified person status before deducting TDS. Non-filers will still face other consequences (inability to carry forward losses, interest under Section 234A for late filing) but not the higher TDS rate under 206AB.

▶ Section 272B — Specified Transactions Requiring PAN
  • Sale or purchase of immovable property > ₹10 Lakh
  • Sale or purchase of motor vehicle (other than two-wheeler)
  • Time deposit (FD) > ₹10 Lakh with bank/post office
  • Purchase of shares, debentures, bonds > ₹10 Lakh
  • Cash deposit > ₹50,000 in any bank account in a day
  • Cash payment > ₹50,000 for bank draft/pay order/banker's cheque
  • Mutual fund units > ₹50,000
  • Foreign travel or forex purchase > ₹50,000
  • Credit/debit card application
  • Opening demat account
  • Payment to hotel/restaurant > ₹50,000

Penalty: ₹10,000 per default under Section 272B for failure to quote PAN or quoting incorrect PAN.

▶ PAN-Aadhaar Linking Timeline
Date Event
31 Mar 2022 Original deadline for free linking
1 Apr 2022 Late fee introduced: ₹500 (1 Apr–30 Jun 2022), then ₹1,000 (from 1 Jul 2022)
30 Jun 2023 Extended deadline for linking with ₹1,000 fee
1 Jul 2023 Unlinked PANs became inoperative (CBDT Circular 3/2023)
Current Can still link with ₹1,000 fee. PAN reactivates within 30 days.

FAQ

Under Section 206AA, if PAN is not furnished, TDS is deducted at the higher of the applicable rate or 20%. For most payments (FD interest at 10%, rent at 10%, contractor at 2%), this means TDS jumps to 20%. The excess TDS can be claimed as a refund when filing ITR, but this blocks your money for 4–9 months. Additionally, Section 272B imposes a ₹10,000 penalty for not quoting PAN in specified financial transactions like property purchase above ₹10 Lakh, vehicle purchase, FD above ₹10 Lakh, or cash deposits above ₹50,000. Both penalties can apply simultaneously.
The direct penalty is a late linking fee of ₹1,000 under Section 234H. But the indirect cost is much higher: since 1 July 2023, unlinked PAN is "inoperative" (CBDT Circular 3/2023). An inoperative PAN means TDS at 20% on all payments, inability to file ITR, pending refunds not processed, higher TCS rates, and you cannot open new demat accounts or make investments requiring PAN. The ₹1,000 fee is a one-time cost to avoid potentially lakhs in excess TDS annually.
No. Section 206AB has been abolished with effect from 1 April 2025 by the Finance Act 2025 (Finance Bill Clauses 66 & 68). Previously (FY 2021-22 to FY 2024-25), 206AB mandated higher TDS at 5% or 2× the normal rate for “specified persons” who hadn't filed ITR for 2 preceding years with TDS/TCS exceeding ₹50,000. The corresponding Section 206CCA (higher TCS) has also been abolished. Payers no longer need to check the compliance portal for specified person status. However, non-filers still face consequences: inability to carry forward losses, interest under Section 234A, and other compliance issues.
Yes, excess TDS under Section 206AA can be claimed as refund by filing ITR. However, you need an active PAN to file ITR. If your PAN is inoperative (not linked to Aadhaar), you must first link it (₹1,000 fee), wait up to 30 days for PAN to become operative, then file ITR. Refund processing typically takes 4–9 months from ITR filing date. The excess TDS is refunded with interest at 6% p.a. (under Section 244A) if the refund exceeds 10% of your tax demand. Note: Section 206AB (higher TDS for non-filers) has been abolished from FY 2025-26.
Step 1: Visit incometax.gov.in > Quick Links > Link Aadhaar. Enter your PAN and Aadhaar number. Step 2: Pay the ₹1,000 late fee via Challan No. ITNS 280 (Major Head 0021, Minor Head 500). Step 3: After payment confirmation (allow 4–5 working days for challan to reflect), complete the linking process on the portal. Step 4: PAN becomes operative within 30 days of successful linking. You can also link via SMS: send "UIDPAN <12-digit Aadhaar> <10-digit PAN>" to 567678 or 56161. After reactivation, all TDS returns to normal rates on future payments.

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