Lakhs of taxpayers in the country are currently waiting for their income tax refund, but the reason is not a big mistake but a small mistake. PAN becoming inoperative. The government told Parliament that in more than 1.3 lakh cases, refunds have been stopped only because the concerned PANs are not active.
How much money is stuck?
According to the Finance Ministry, a total refund of ₹ 340.30 crore is stuck in these cases. This situation shows how big a loss taxpayers can suffer by not following a simple rule.
PAN-Aadhaar link mandatory
The government has clarified that it is now mandatory for individual taxpayers to link PAN with Aadhaar. If this is not done, PAN becomes inoperative, due to which processes like refund are affected.
9.25 crore PANs became inactive
According to government data, by January 1, 2026, about 9.25 crore PANs had become inoperative. This shows that a large number of people have still not been able to complete this important process.
₹2,338 crore recovered from late fees
The government has so far collected late fees of about ₹ 2,338.31 crore from those who delayed the PAN-Aadhaar link. It is clear from this that the government is strict regarding this rule.
Why is the refund being blocked?
The Finance Ministry clarified that despite having an inoperative PAN, ITR is processed and credit for TDS is also available. But under the law (Section 139AA), refund is not issued until the PAN is reactivated.
Complaints are increasing
There has also been an increase in complaints related to PAN and refund.
- 1,114 complaints in 2024-25
- 1,156 complaints in 2025-26
A total of 2,270 complaints have been registered, which shows the growing impact of this problem.
What is inoperative PAN?
When PAN is not linked to Aadhaar in time, the Income Tax Department deactivates it. This not only stops the refund, but many financial activities can also be affected.
What should taxpayers do?
According to experts, taxpayers should immediately link PAN-Aadhaar, deposit late fees (if applicable) and check the status of PAN on the income tax portal. The government’s message is clear. It is not enough to fill ITR correctly, following the necessary rules is equally important. If PAN is not active, your refund may get stuck, hence it is important to give it priority.