Rule 162 — When PAN becomes inoperative under section 262(6). Made under s.262, s.397 of the Income-tax Act, 2025.
Rule 162 gives effect to Section 262 and Section 397 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
Sub-rule (1) states the position of a person who was allotted a Permanent Account Number and was required to intimate his Aadhaar number under section 262(6) but failed to do so: his Permanent Account Number being inoperative, he is liable for payment of fees in accordance with rule 158. Sub-rule (2) provides the way back — where such a person has intimated his Aadhaar number under section 262(6) after paying the fees in accordance with rule 158, his Permanent Account Number becomes operative within thirty days from the date of intimation of the Aadhaar number.
Sub-rule (3) sets out the consequences while the Permanent Account Number is inoperative, for the period commencing from the date of commencement of this rule till the date it becomes operative. Refund of any amount of tax, or part of it, due under the Act is not to be made; interest is not payable on such refund for that period; and where tax is deductible or collectible at source under Chapter XIX-B in the case of such a person, it is to be deducted or collected at the higher rate, in accordance with section 397(2).
Sub-rule (4) leaves the mechanics to the systems authority: the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) is to specify the formats and standards along with the procedure for verifying the operational status of the Permanent Account Number under sub-rules (1) and (2).
Section 262(6) requires the Aadhaar number to be intimated, and the Act attaches consequences to a Permanent Account Number that is inoperative, but the working details are left open: what the defaulter must pay, how long restoration takes, exactly which consequences run and for what period, and how anyone is to check the status. Rule 162 supplies all four. Sub-rule (3) is drafted as a period rather than as a penalty, so the consequences attach for the span of the default and stop when the number becomes operative.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time for the Permanent Account Number to become operative again | Within thirty days from the date of intimation of the Aadhaar number | Aadhaar number intimated under section 262(6) after payment of fees in accordance with rule 158 | Rule 162(2) |
| Period for which the consequences run | From the date of commencement of this rule till the date the Permanent Account Number becomes operative | Applies to the withholding of refund, the denial of interest on it, and the higher rate of deduction or collection | Rule 162(3) |
| Rate of deduction or collection at source | The higher rate in accordance with section 397(2) | Where tax is deductible or collectible at source under Chapter XIX-B in the case of such a person; the rule does not itself state the rate | Rule 162(3)(c) |
The rule does not state a higher rate of its own — sub-rule (3)(c) points to section 397(2), and reading a figure into the rule would be reading in something it does not contain. The fee is equally a pointer, to rule 158. Restoration is not instantaneous even when the default is cured: sub-rule (2) allows up to thirty days from the date of intimation, and the fees must have been paid before the intimation counts for that purpose. Refunds are suspended, not forfeited, but the interest on them is: sub-rule (3)(b) denies interest for the period of the default, so a taxpayer who delays intimation loses the compensation for the delay he caused. Third parties are affected without any default of their own — a deductor facing a person whose Permanent Account Number is inoperative must deduct at the higher rate under section 397(2), which is why sub-rule (4) requires a procedure for verifying operational status.
A person who was required to intimate his Aadhaar number under section 262(6) does not do so, and his Permanent Account Number is inoperative. His refund for the year is not made and no interest runs on it for that period, and his customers deduct tax on payments to him at the higher rate under section 397(2). He then pays the fee under rule 158 and intimates his Aadhaar number; the Permanent Account Number becomes operative within thirty days of that intimation, and the consequences in rule 162(3) stop from that date.
You meet it as the inoperative status shown against a Permanent Account Number when a return, a refund or a deduction is processed, and as the higher deduction a payer applies until the status is verified as operative under the procedure in sub-rule (4).
his Permanent Account Number shall become operative within thirty days from the date of intimation of Aadhaar number
refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made