- Individuals not having a PAN will be able to quote Aadhaar instead while filing their income tax returns, as announced in the Budget. (Also read: “Either Aadhaar or PAN will do”)
- The government has said that Aadhaar will be accepted interchangeably with PAN under the Income Tax Act. (Also read: Taxman to “suo motu” allot PAN to those only furnishing Aadhaar)
- Tax experts believe this will lead to expansion of the tax base. (Also read: Aadhaar, PAN steps to expand tax base, say experts)
- This means Aadhaar – or the 12-digit Unique Identity Number or UID – can also be quoted for cash transactions of more than Rs. 50,000.
- Similarly, Aadhaar can also be quoted for deposit or withdrawal of more than Rs. 50,000 worth of cash from a bank account in place of PAN.
- Currently, quoting of PAN is mandatory for cash transactions – such as hotel or foreign travel bills – exceeding Rs. 50,000.
- PAN is also mandatory on purchase of immovable property of over Rs. 10 lakh.
- “PAN and Aadhaar both will exist because some people may prefer to use Aadhaar, some people may prefer to use PAN. But at the back end, for every PAN there will be an Aadhaar,” Revenue Secretary Ajay Bhushan Pandey said last week. (Also read: Aadhaar can be used for cash transactions above Rs. 50,000, says government)
- In the first Budget after its return to power in May this year, the government also proposed to consider issuing Aadhar card to NRIs with Indian passports on arrival in the country without waiting for the mandatory 180 days. (Also read: Aadhaar for NRIs on arrival without waiting, says government)
- Of the over 41 crore PANs issued, 22 crore have been linked to Aadhaar.
Govt to impose penalty for misquoting Aadhaar
PAN SUBSTITUTION Misrepresenting identity number in transactions to draw penal action
NEW DELHI: The option of quoting your Aadhaar unique identity number, in place of the permanent account number (PAN), in performing high-value transactions — buying a car or home, travelling overseas or making investments — will come with a flip side. You will be liable to pay a penalty of ₹10,000 every time you provide the wrong number.
The penal provision is expected to be applicable from September 1, 2019 after amendments are made to the relevant laws and the subsequent issuance of a notification, two government officials aware of the development said, requesting anonymity.
Any individual who fails to quote his or her identification number accurately in the documents related to high-value transactions may attract a fine of ₹10,000 for each such violation and a similar penalty will be imposed on the person who is supposed to authenticate the identification number, one of the official said. “It is also proposed that before passing a penalty order, a person shall be heard,” the official added.
The second official said the existing laws will be amended in lines with the July 5 budget announcement that allowed the
interchangeability of PAN and Aadhaar.
Finance minister Nirmala Sitharaman said in her fiscal 2019-20 budget speech that more than 1.2 billion Indians now possess the Aadhaar unique ID number. In comparison, only 220 million have PAN.
“Therefore, for ease and convenience of tax payers, I propose
to make PAN and Aadhaar interchangeable and allow those who do not have PAN to file Income Tax returns by simply quoting their Aadhaar number and also use it wherever they are required to quote PAN,” Siitharaman said.
Individuals can provide the Aadhaar number for opening a bank account, making an application for a credit or debit card, opening a demat account, for paying hotel and restaurant bills that amount to more than ₹50,000 and selling or purchasing goods or services exceeding ₹2 lakh per transaction.
According to experts, Section 272B of the Income Tax Act provides for penal provisions on violations related to use of PAN. The government is seeking legal amendments so that the penal provision can also be extended to Aadhaar.
The proposed amendment will make the penalty clause unambiguous and stringent by specifically emphasising that each violation would attract a fine of ₹10,000. The existing law is vague and allows the discretion of assessment officers.
“Proposal to link PAN with Aadhaar and making Aadhaar interchangeable where one is not having PAN is a welcome move and shows the government’s focus on making Aadhaar the basis for tracking financial transactions,” said Kuldip Kumar, partner and leader, personal tax, at consulting firm PwC India. “This will not only help to collect the rightful taxes by the government but will also help to track bogus/shell transactions.”
The penalty of ₹10,000 for every violation will act as a deterrent to misquoting the Aadhaar number in performing financial transactions, he added.