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Why Banks May Freeze Accounts Without a Linked PAN (2025 Guide)

Posted on by PVC CARD PRINTING

Introduction

In India, linking your Permanent Account Number (PAN) with your bank account is a mandatory requirement under income tax laws. Failure to do so may result in your bank account being frozen, preventing you from conducting financial transactions.

In this guide, we will explain why banks freeze accounts without a PAN, its impact on customers, and how to prevent it.

Why Is PAN Linking Mandatory for Bank Accounts?

The Income Tax Act, 1961, and the Reserve Bank of India (RBI) mandate PAN linking for all bank accounts for the following reasons:

1. To Track High-Value Transactions

  • PAN helps the Income Tax Department monitor large cash deposits, withdrawals, and financial transactions.
  • Transactions above ₹50,000 (cash deposits, demand drafts, fund transfers) require a PAN.

2. To Prevent Money Laundering and Fraud

  • The Prevention of Money Laundering Act (PMLA) mandates banks to verify PAN details.
  • Unverified accounts are flagged as suspicious, leading to a potential freeze.

3. To Ensure KYC Compliance

  • The Know Your Customer (KYC) process requires PAN to verify identity.
  • Accounts without PAN may be deactivated for non-compliance.

4. For Income Tax and TDS Deduction Compliance

  • PAN is required for reporting Tax Deducted at Source (TDS) on interest earned.
  • Without PAN, banks deduct 20% TDS instead of 10% on interest earned above ₹40,000 (₹50,000 for senior citizens).
  • PAN is required to link Aadhaar with a bank account, another legal mandate.
  • Many financial services, such as UPI payments and loan applications, need Aadhaar-PAN linking.

What Happens If Your PAN is Not Linked to Your Bank Account?

If your PAN is not linked, banks may take the following actions:

  1. Account Freezing: Banks may freeze accounts without prior notice for non-compliance.
  2. Higher TDS Deduction: You may be charged double the standard TDS rate.
  3. Restricted Transactions: You may be unable to deposit/withdraw funds above ₹50,000.
  4. Loan Rejection: Your credit card or loan application may be rejected.
  5. Delayed Tax Refunds: Income tax refunds may be delayed due to missing PAN details.

How to Check If Your PAN Is Linked to Your Bank Account

Method 1: Through Internet Banking

  1. Log in to your bank’s internet banking portal.
  2. Navigate to the Profile/KYC section.
  3. Check if your PAN is linked and verified.

Method 2: Contact Your Bank

  • Call your bank’s customer care and inquire about PAN linking.
  • Visit your branch with your PAN card to confirm the status.

Method 3: Check Form 26AS for Bank Reporting

  1. Visit the Income Tax e-Filing Portal: https://www.incometax.gov.in/
  2. Log in using your PAN credentials.
  3. Check if your bank account is listed under Form 26AS (Annual Tax Statement).

Method 1: Online PAN Linking

  1. Log in to your bank’s online portal.
  2. Go to Profile > KYC Update.
  3. Select Link PAN and enter your PAN number.
  4. Click Submit and wait for verification.

Method 2: Via Bank Branch

  1. Visit your bank branch with your PAN card and Aadhaar.
  2. Fill out the PAN linking form.
  3. Submit a self-attested copy of your PAN card.
  4. The bank will update your PAN within 48-72 hours.

Method 3: Via SMS or Customer Support

  • Some banks allow PAN linking via SMS services or customer care numbers.
  • Call your bank to check if this facility is available.

Frequently Asked Questions (FAQs)

1. Can I Open a Bank Account Without PAN?

Yes, but it will be a Basic Savings Bank Deposit Account (BSBDA) with transaction limits. PAN is needed for regular accounts.

2. Will My Bank Account Be Frozen Immediately If My PAN Is Not Linked?

Banks may send reminders before freezing accounts, but in case of non-compliance, the freeze can happen without further notice.

3. How Do I Unfreeze My Bank Account?

  • Submit your PAN details at the bank branch.
  • If PAN is lost, apply for a Duplicate PAN Card.

Yes, per RBI and income tax rules, PAN and Aadhaar should be linked to prevent account restrictions.

Most banks update PAN within 48-72 hours after submission.

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Conclusion

To avoid account freezing, higher TDS deductions, and financial restrictions, it is essential to link your PAN with your bank account. Use online banking, visit your branch, or call customer support to update your PAN today.

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