The Income Tax Department will automatically issue Permanent Account Numbers, or PAN, to taxpayers who use their Aadhaar numbers for filing tax returns, PTI reported on Monday. This is part of a new arrangement to link the two databases.
The Central Board of Direct Taxes in a notification issued on August 30 said a person with an Aadhar number but not a PAN card “shall be deemed” to have applied for allotment of PAN and they will not be required to apply or submit any documents. It said the news rules were effective from September 1. The Central Board of Direct Taxes frames policy for the tax department.
PAN is a 10-digit alphanumeric number allotted by the tax department to a person, firm or entity.
The notification by the direct taxes board said the income tax department would “obtain demographic information of an individual from the Unique Identification Authority of India for allotment of Permanent Account Number, a ten-digit alphanumeric identifier issued by it”.
It added that tax department would be “responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing or intimation or quoting or authentication of Aadhaar number or obtaining of demographic information of an individual from the UIDAI, for allotment of permanent account number and issue thereof”.
On July 5, Finance Minister Nirmala Sitharaman had said during Budget presentation that people could quote Aadhaar numbers instead of PAN while filing tax returns. Sitharaman had said it would allow those who do not have a PAN card to give their Aadhaar number whenever needed.
In July, Central Board of Direct Taxes Chairperson PC Mody had said that the department would “suo motu” allot a fresh PAN to people who file tax returns with only their Aadhaar. “In cases where Aadhaar is being quoted and PAN is not there, we could possibly think on the terms of allotting a PAN to the person [who is filing income tax return],” he told PTI.
“The law provides that the assessing officer can suo motu allot PAN,” Mody added. “So, if Aadhaar is being quoted without PAN, I give him the PAN. It becomes linked.” Mody said linking of the two databases was compulsory and backed by law.
In order to curb black money, providing PAN was made mandatory for cash transactions such as hotel or travel bills exceeding Rs 50,000. PAN is also necessary to purchase immovable property costing more than Rs 10 lakh.
In September 2018, the Supreme Court had made Aadhaar optional for mobile phones and bank accounts but said it would still need to be linked with Permanent Account Numbers for filing tax returns. The verdict had come after several petitioners raised concerns about privacy, and asked why the unique identity number was made mandatory for people looking to avail of welfare schemes, file income tax returns, hold mobile numbers, and bank accounts.
After the Supreme Court upheld Section 139AA of the Income Tax Act, the government in March extended the deadline for linking PAN with Aadhaar by six months till September 30. Quoting of Aadhaar is mandatory for filing income tax returns, following the court order.
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