Individuals having permanent account number (PAN) will have to link it to their existing Aadhaar number from 1 July, a finance ministry notification said on Wednesday.
Amending income tax rules, the government has made quoting the 12-digit identification number or Aadhaar enrolment ID compulsory while applying for PAN, which is mandatory for filing tax returns, opening of bank accounts and financial transactions beyond a threshold.
Every person who has been allotted PAN as on the 1st day of July shall intimate his Aadhaar number to the tax authorities, the notification from revenue department said.
Biometrics identification enabled by Aadhaar proves the identity of the PAN holder and helps tax authorities to crack cases of multiple PANs held by the same person with the idea of tax evasion. As many as 20.7 million taxpayers have already linked their Aadhaar with PAN. There are over 250 million PAN card holders in the country while Aadhaar has been issued to 1.15 billion people.
The rule will come into force from 1 July, the revenue department said while amending Rule-114 of the Income Tax Act, which deals in application for allotment of PAN.
Earlier this month, the tax department had clarified that the relief granted by the Supreme Court regarding non-cancellation of PAN for not linking Aadhaar with it was applicable only in cases of people who do not have Aadhaar and do not wish to obtain it for the time being. Their PAN cards will not be treated as invalid. For tax filing, Aadhaar is mandatory from 1 July.
“The notification does not specify the form and manner in which Aadhaar should be intimated, neither the timelines for such intimation have been set out,” said Sonu Iyer, tax partner and people advisory services leader, EY.
“Individuals having a PAN but no Aadhaar application number who would be filing an income tax return post June 30, 2017 will need to apply for Aadhaar in order to be able to file the income tax return.
Individuals who are not required to file an income tax return but who have a PAN and are eligible to obtain Aadhaar (whether they have one or not) as on July 1, 2017 should wait for further notification which will specify the date and manner in which the two identification numbers shall be linked,” added Iyer.
Aadhaar-linked PAN enables taxpayers to verify their returns through a one-time password sent to their phone numbers at the time of filing returns.
This makes return filing easier as there is no need for an e-filer to send a signed physical copy of the return to the department, completing the legal formality of filing.
Aadhaar and the password performs the verification function of an assessee’s signature in a physical copy of the return that pledges the information furnished to be true.
