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Direct and Indirect Taxation · PAN

Quoting of PAN and Transactions Requiring PAN under Income-tax Act, 2025

Updated 10 October 2026 · Fact-checked

Under section 262 of the Income-tax Act, 2025, you must quote your PAN in returns, correspondence with income-tax authorities and challans, and in documents of transactions the Board prescribes. Eligible persons must also link Aadhaar, or the PAN becomes inoperative. Defaults attract a penalty of ₹10,000 under section 467.

Understand Quoting of PAN and Transactions Requiring PAN

A Permanent Account Number (PAN) is a unique identifier that lets the department track a person's financial dealings. Getting a PAN is only the first step. The law also tells you where you must show it. That is what "quoting" means.

Section 262(3) gives the general rule. Every person must quote PAN in all returns to, or correspondence with, any income-tax authority, and in all challans for payment of any sum due under the Act. This applies to everyone who holds a PAN.

Section 262(9) deals with transactions. Every person entering into a transaction that the rules prescribe must quote PAN or Aadhaar number in the documents of that transaction and must authenticate it. The person who receives such a document must also check that the number is quoted and authenticated. So the duty falls on both sides. The list of transactions and documents is not in the Act. Section 262(10) and section 533(2)(h) leave it to rules made by the Board. Learn the section, and learn that the list sits in the rules.

Aadhaar is linked to PAN in two ways. Under section 262(5), a person eligible for an Aadhaar number must quote it in the PAN application and in the return of income. Under section 262(6), a PAN holder who is eligible for Aadhaar and not covered by sub-section (5) must intimate the Aadhaar number to the prescribed authority. If the person fails to do so, the PAN is made inoperative in the prescribed manner. Section 262(7) lets a person quote Aadhaar in place of PAN in certain cases. Section 262(12) allows the Central Government to exempt notified persons or classes, or any State or part of a State, from sub-sections (5) and (6).

Two more points matter. A person cannot hold more than one PAN (section 262(8)). A person must also intimate the Assessing Officer of a change in address, or in the name and nature of business, on which the PAN was allotted (section 262(4)).

Key rules to remember

General quoting rule
PAN to be quoted in: all returns + all correspondence with income-tax authority + all challans (s.262(3))
Applies to every person holding a PAN.
Transaction quoting rule
Prescribed transaction → quote PAN or Aadhaar in document + authenticate (s.262(9)(a))
The receiver must ensure it is quoted and authenticated (s.262(9)(b)). Transactions are prescribed by rules.
Aadhaar with PAN application and return
Eligible for Aadhaar → quote Aadhaar in PAN application and return of income (s.262(5))
Section 262(6) covers PAN holders who must intimate Aadhaar otherwise.
Non-intimation of Aadhaar
Aadhaar not intimated under s.262(6)(a) → PAN made inoperative (s.262(6)(b))
Inoperative in the manner prescribed. Sub-sections (5) and (6) can be switched off by notification for some persons or areas (s.262(12)).
Aadhaar in lieu of PAN
Aadhaar may be quoted instead of PAN (s.262(7))
Available to a person without PAN who holds Aadhaar, or to a PAN holder who has intimated Aadhaar.
One PAN only
One person = one PAN (s.262(8))
Applying for or holding a second PAN is not permitted.
Penalty
Penalty = ₹10,000 (s.467)
General default under s.467(1). Per default for false number, failure to quote or authenticate, and receiver's failure under s.467(2) to (4). The Assessing Officer 'may' impose it.

How to solve Quoting of PAN and Transactions Requiring PAN questions

Use this method for any question on quoting PAN, Aadhaar linkage or the related penalty.

  1. 1Identify the document or act: return, correspondence, challan, or a prescribed transaction document.
  2. 2Apply the general rule of section 262(3) if it is a return, correspondence or challan. PAN must be quoted.
  3. 3If it is a transaction, check whether it is prescribed by the rules. If it is, section 262(9) requires PAN or Aadhaar to be quoted and authenticated.
  4. 4Check the Aadhaar position: is the person eligible for Aadhaar, and has it been quoted or intimated? If not, the PAN can be made inoperative.
  5. 5Identify the default: failure to quote, failure to authenticate, a false number, or the receiver's failure to check.
  6. 6Apply section 467: penalty of ₹10,000, per default for the transaction cases. Say the Assessing Officer may impose it.
  7. 7Write a short conclusion that names the section and the amount.

Quickest way: Three-question check

When to use it: Use for MCQs and short-answer questions where you need the answer in under a minute.

  1. Ask: what is being filed or signed? Return, correspondence or challan means PAN must be quoted (s.262(3)).
  2. Ask: is it a prescribed transaction document? If yes, PAN or Aadhaar must be quoted and authenticated (s.262(9)), and the receiver must check.
  3. Ask: what went wrong? Any default under section 262 carries a ₹10,000 penalty. Count each default separately where the section says 'for each such default'.

Common mistakes in Quoting of PAN and Transactions Requiring PAN

  • Writing that the Act lists every transaction that needs PAN.

    Students remember a list from the old law or from coaching notes.

    Fix: Say that section 262(9) requires quoting for transactions prescribed by rules, and the Board makes those rules under section 262(10) and section 533(2)(h).

  • Saying the PAN is cancelled if Aadhaar is not intimated.

    Inoperative and cancelled sound alike.

    Fix: The Act says the PAN 'shall be made inoperative' in the prescribed manner. Use the word inoperative.

  • Forgetting that the receiver of the document also has a duty.

    Students think only the person entering the transaction is responsible.

    Fix: Quote section 262(9)(b) and the penalty in section 467(4) for the receiver's failure to ensure correct quoting.

  • Stating the penalty as ₹10,000 per default in every case.

    The rule is simplified to one number.

    Fix: Section 467(1) is a general penalty of ₹10,000. Per-default wording appears in section 467(2), (3) and (4).

  • Using section 139A or 272B from the 1961 Act.

    Old notes are still in circulation.

    Fix: For the June 2027 term use sections 262 and 467 of the Income-tax Act, 2025.

  • Treating Aadhaar as mandatory for everyone.

    The rule is overstated.

    Fix: Aadhaar duties apply to those eligible to obtain an Aadhaar number, and sub-sections (5) and (6) can be made inapplicable to notified persons, classes or areas under section 262(12).

Worked examples

Example 1

Ravi Traders, a proprietary firm of Mr Ravi Kumar, is paying advance tax through a challan. The challan does not show the PAN. Which section applies and what is the consequence?

Show the solution
  1. The payment is of a sum due under the Act, made by challan.
  2. Section 262(3) requires every person to quote PAN in all challans for payment of any sum due under the Act.
  3. Failure to quote is a failure to comply with section 262.
  4. Under section 467(1), the Assessing Officer may impose a penalty of ₹10,000.

Answer: PAN must be quoted in the challan under section 262(3). On failure, the Assessing Officer may impose a penalty of ₹10,000 under section 467(1).

Example 2

Meera Pvt Ltd enters into a transaction that is prescribed under section 262(9)(a). The buyer, Mr Anil, quotes a PAN number that he knows to be false. The company accepts the document without checking. State the consequences.

Show the solution
  1. Section 262(9)(a) requires the person entering into a prescribed transaction to quote PAN or Aadhaar and authenticate it.
  2. Mr Anil gave a number he knew to be false. Section 467(2) lets the Assessing Officer impose ₹10,000 for each such default.
  3. Section 262(9)(b) requires the receiver of the document to ensure the number is quoted and authenticated.
  4. Meera Pvt Ltd did not check. Section 467(4) lets the Assessing Officer impose ₹10,000 for each such default on the person responsible.
  5. The two penalties are separate, since they are on two different persons.

Answer: Mr Anil may face a penalty of ₹10,000 for each default under section 467(2). Meera Pvt Ltd may face ₹10,000 for each default under section 467(4).

Exam tips

  • Learn the sub-section numbers of section 262: (3) quoting, (5) and (6) Aadhaar, (7) Aadhaar in lieu, (8) one PAN, (9) transactions.
  • In MCQs, look for the word 'inoperative'. It is the Act's consequence for not intimating Aadhaar.
  • Remember that the Assessing Officer 'may' impose penalty. Use 'may' in written answers.
  • Keep a one-line distinction ready: PAN identifies a person for tax purposes, while TAN is the number for persons who deduct or collect tax. Both are dealt with in separate topics.
  • Write the answer in the order: rule, section, default, penalty.

Practice questions from PAN

Quoting of PAN and Transactions Requiring PAN: frequently asked questions

Where must I quote my PAN under the Income-tax Act, 2025?

Section 262(3) requires PAN in all returns, all correspondence with income-tax authorities and all challans. Section 262(9) adds documents of prescribed transactions. The list of those transactions is made by rules.

What happens if my PAN is not linked with Aadhaar?

If you are eligible for Aadhaar and fail to intimate it as section 262(6)(a) requires, the PAN shall be made inoperative in the prescribed manner. Section 262(12) allows notified persons or areas to be exempted.

Can I quote Aadhaar instead of PAN?

Yes, in the cases in section 262(7). A person without a PAN who has Aadhaar may quote it, and a PAN holder who has intimated Aadhaar may quote it in lieu of PAN.

What is the penalty for not quoting PAN?

Section 467 allows the Assessing Officer to impose a penalty of ₹10,000. For failure to quote or authenticate in a prescribed transaction document, the penalty is ₹10,000 for each such default.