Come September, PAN Not Linked To Aadhaar Will Be Deemed Invalid; Here’s Why It Will Be A Gamechanger

The government will invalidate all PAN cards that are not linked to Aadhaar by September, Business Standard reported.

Currently 180 million out of the existing 400 million PAN cards are not linked to Aadhaar.

During her budget speech, Union Finance Minister Nirmala Sitharaman announced that those who did not have a PAN number could file returns using their Aadhaar number. In case of transactions where have to quote a PAN number to buy big ticket items (like automobiles or jewellery), Aadhaar will again be deemed valid.

While in theory, this has been explained as a simplification for taxpayers but, in reality, what this will enable is the creation of PAN numbers for millions of Aadhaar users who may or may not be filing returns.

To validate and continue using the existing PAN cards, citizens will have to necessarily link them to Aadhaar.

Every time an Aadhaar is used to buy something, at the back end a PAN number will be generated and sent to the user. Those who cite an Aadhaar number, which is not already linked to a PAN number, for tax returns and other specified transactions after 1 September, will get a fresh one from the Income Tax Department.

The government has also proposed the insertion of Sub-section (6B) in the I-T Act, putting the onus of checking authenticity of PAN and Aadhaar on the receivers of the documents.

Even though the Central Board of Direct Taxes (CBDT) has extended the last date for providing the Aadhaar number and linking it with PAN by six months to 30 September, it has already made it mandatory to quote as well as link Aadhaar number for filing income tax return.

By obliterating the line separating an income-tax number (PAN) from an ID number (Aadhaar), India is potentially on the road to a single effective tax-cum-social security number.