Section 262 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 262 is the only section of Part A of Chapter XV, and it governs the Permanent Account Number (PAN): who must apply for one, when anyone may apply, where it must be quoted, how it links with the Aadhaar number, that a person may hold only one, and what the rules and notifications may add. This article explains it as per the Income-tax Act, 2025 as amended by the Finance Act, 2026.
A person who has no PAN must apply within the prescribed time if his total income exceeded the maximum amount not chargeable to income-tax, if his business turnover or receipts are or are likely to exceed Rs. 5,00,000, if he must file a return, or in the other cases in sub-section (1). Everyone must quote the PAN in returns, correspondence and challans. A person who is eligible for Aadhaar must quote or intimate it, or the PAN may be made inoperative. Only one PAN may be held.
By section 1(3), the Act is in force from 1 April 2026, save as otherwise provided. Section 262 is shown as amended by section 65 of the Finance Act, 2026: in sub-section (10)(c) the words "pertaining to, business or profession, or other transactions," were substituted, with effect from 1 April 2026. Later amendments, rules and notifications should be checked. If you need your PAN position reviewed together with your return, see our income tax return filing service.
Who must apply: sub-section (1)
Every person who has not been allotted a PAN shall, within such time as may be prescribed, apply to the Assessing Officer for its allotment if he fulfils any of these conditions:
| Clause | Condition |
|---|---|
| (a) | His total income, or the total income of any other person for which he is assessable under the Act, during any tax year exceeded the maximum amount not chargeable to income-tax |
| (b) | He is carrying on a business or profession whose total sales, turnover or gross receipts are or is likely to exceed Rs. 5,00,000 in any tax year |
| (c) | He is required to furnish a return of income under section 263 for any tax year |
| (d) | He is a resident, other than an individual, which enters into a financial transaction aggregating to Rs. 2,50,000 or more in a tax year |
| (e) | He is the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer of the person in clause (d), or any person competent to act on behalf of that person |
| (f) | He intends to enter into such transaction as may be prescribed by the Board in the interest of revenue |
The time for applying, and the transactions in clause (f), are left to the Income-tax Rules, 2026 and to the Board; see our rule-wise guides. The form of the application is not in the text. Return obligations are in section 263, explained in our article on section 263(1).
Who may apply voluntarily: sub-section (2)
Any person not covered by sub-section (1) may apply to the Assessing Officer for the allotment of a PAN, after which the Assessing Officer shall allot a PAN to that person.
Quoting and changes: sub-sections (3) and (4)
- (3) Every person shall quote the PAN in all his returns to, or correspondence with, any income-tax authority and in all challans for the payment of any sum due under the Act.
- (4) Every person shall intimate the Assessing Officer of any change in his address or in the name and nature of his business on the basis of which the PAN was allotted.
PAN and Aadhaar: sub-sections (5) to (7)
| Sub-section | Rule |
|---|---|
| (5) | Every person eligible to obtain an Aadhaar number shall quote it in the application for allotment of PAN and in the return of income |
| (6)(a) | In cases other than sub-section (5), every person who has been allotted a PAN and is eligible to obtain Aadhaar shall intimate his Aadhaar number to the prescribed income-tax authority in such form and manner as may be prescribed |
| (6)(b) | If he fails to intimate it as per clause (a), the PAN allotted to him shall be made inoperative in such manner as may be prescribed |
| (7)(a) | A person required to furnish, intimate or quote a PAN who has no PAN but possesses Aadhaar may furnish, intimate or quote his Aadhaar number in lieu of the PAN, and shall be allotted a PAN in the manner prescribed |
| (7)(b) | A person who has a PAN and has intimated Aadhaar under sub-section (6) may furnish, intimate or quote Aadhaar in lieu of the PAN |
One PAN only: sub-section (8)
A person who has already been allotted a PAN cannot apply, obtain or possess another PAN.
Quoting in documents: sub-section (9)
- (a) Every person entering into such transaction as may be prescribed shall quote his PAN or Aadhaar number in the documents pertaining to the transaction and authenticate it in the manner prescribed.
- (b) Every person receiving any such document shall ensure that the PAN or Aadhaar number has been duly quoted and authenticated in the manner prescribed.
Rules, notifications and exceptions: sub-sections (10) to (12)
The Board may make rules providing for: (a) the form, manner and time of application and the particulars it contains; (b) classes of persons who must apply; (c) categories of documents pertaining to business or profession, or other transactions, in which the PAN is to be quoted; (d) the form and manner of the declaration by a person who has not been allotted a PAN; (e) the manner of authentication; and (f) classes of persons to whom the section does not apply, having regard to the transactions or circumstances.
Under sub-section (11), the Central Government may, by notification, specify classes of persons who shall apply for a PAN within the time mentioned in the notification. Those classes may include persons by whom tax is payable under the Act, persons by whom any tax or duty is payable under any other law in force, and importers and exporters, even when no tax is payable by them. Under sub-section (12), sub-sections (5) and (6) do not apply to such person or class of persons, or any State or part of a State, as may be notified.
What has been notified or prescribed is not in the text consulted, and none is named here.
Definitions: sub-section (13)
- "Aadhaar number" has the meaning in section 2(a) of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016). That Act is another law; the reader should check it.
- "Assessing Officer" includes an income-tax authority who is assigned the duty of allotting PAN.
- "Authentication" means the process by which the PAN or Aadhaar number, along with demographic or biometric information of an individual, is submitted to the income-tax authority or other authority or agency as may be prescribed for verification of its correctness.
A worked example
Names and amounts are assumed; the Rs. 5,00,000 and Rs. 2,50,000 figures are those printed in clauses (b) and (d).
- Mr. Tarun Bhatia starts a small trading business and expects gross receipts of Rs. 6,50,000 in the tax year. Clause (b) applies because the receipts are likely to exceed Rs. 5,00,000. He has no PAN, so he must apply to the Assessing Officer within the prescribed time.
- Greenfield Society (a resident, not an individual) enters into financial transactions aggregating to Rs. 3,00,000 in a tax year. Clause (d) applies (Rs. 2,50,000 or more). Under clause (e), its secretary, as a person competent to act on its behalf, and its office bearers must also apply if they fit the description there.
- Ms. Noor Ahmed already has a PAN. Under sub-section (8) she cannot apply for or possess another. If she is eligible for Aadhaar and has not intimated it, sub-section (6)(b) allows her PAN to be made inoperative in the manner prescribed.
Need help with PAN, Aadhaar and your return?
A missing or inoperative PAN affects returns, challans and documents alike. Our team can review whether you must apply, intimate Aadhaar or quote the number correctly alongside your return under our income tax return filing service.
Key takeaways
- Six conditions in sub-section (1) require a person without a PAN to apply, including receipts above Rs. 5,00,000 and financial transactions of Rs. 2,50,000 or more by a resident other than an individual.
- Anyone else may apply voluntarily under sub-section (2).
- The PAN must be quoted in returns, correspondence and challans.
- Aadhaar must be quoted or intimated by those eligible; failure can make the PAN inoperative.
- Only one PAN may be held.
Read next
- Section 263: return of income, who must file and due dates
- Sections 264 and 265: tax return preparers and verification of return
- Section 266: self-assessment tax
- Chapter XV: return of income
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.