​​​​​The Central Board of Direct Taxes has notified Rule 114AAA prescribing the manner and consequences if PAN becomes inoperative. The Rule 114AAA(3) provides that if PAN of a person become inoperative, then he shall be liable for the following consequences:

1. Refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made;
2. Interest shall not be payable on such refund for the period, beginning with the date when PAN become inoperative and ending with the date on which it becomes operative;
3. Where tax is deductible under Chapter XVIIB in case of such person, such tax shall be deducted at higher rate, in accordance with provisions of section 206A​A;

Where tax is collectible at source under Chapter XVII-BB in case of such person, such tax shall be collected at higher rate, in accordance with provisions of section 206CC​.

However, the person can reactivate his PAN by subsequently intimating his Aadhaar to the Department.

Further, if a person fails to link PAN-Aadhaar by due date, he shall be liable to pay a fee, maximum of Rs. 1,000 under  section 234H. If a person intimates his Aadhaar number after the due date, then he shall be liable to pay a fee of:

a. Rs. 500, if such intimation is made between 01-04-2022 and 30-06-2022; and

b. Rs. 1,000, in all other cases​