Why SC makes PAN-Aadhaar mandatory?
PAN (permanent account number) is a 10-digit alphanumeric number issued to assessee by the Income Tax Department.
Aadhaar is a unique 12-digit identification number issued to individuals by the Unique Identification Authority of India after storing their biometrics data. The UIDAI uses iris and fingerprint scans to obtain biometric data from an applicant and store it in a database.
The Supreme Court while delivering its verdict on the Aadhaar Act made the linking of Aadhaar with PAN mandatory. While certain sections of the Act were removed by the apex court, making the linking of Aadhaar and PAN mandatory is expected to help the government. Here are the reasons why the court allowed PAN-Aadhaar linking:
Prune out fake PANs: The linking of PAN and Aadhaar will help in pruning out fake PANs from the system. This is important as many individuals and entities possess multiple PANs with the intention of cheating the government when it comes to paying taxes.
Ensure Tax compliance: Just like the linking will help in rooting out multiple PANs, it is expected that the linking will ensure that individuals can’t cover up transactions. In the country, many individuals do not quote their PAN when it comes to high-value transactions as they want to conceal the transactions.
Carry out document verification: The court took note of the fact that PAN-Aadhaar linking will enable 100% seamless verification of personal data provided in the PAN application form. As of now, verification of data or original documents is carried out in only 0.2% of the cases.
Help in the easy financial trail: The linking of PAN-Aadhaar will ensure that information can be shared with other jurisdictions smoothly. It will ensure an easy financial trail and help curb black money and check money laundering.
Importance of Linking PAN Card with Aadhaar Card
Both the PAN cards as well as the Aadhaar card are unique identification cards that serve as proof of identity that are necessary for registration and verification purposes.
The government has urged all entities to link their PAN cards with their Aadhaar cards. This is being done for the following purposes:
Prevent Tax Evasion:
By linking the Aadhaar and PAN cards, the government will be able to keep tabs on the taxable transactions of a particular individual or entity, whose identity and address will be verified by his Aadhaar card. This will effectively mean that every taxable transaction or activity will be recorded by the government.
As a result, the government will already have a detailed record of all the financial transactions that would attract tax for each entity, making tax evasion a thing of the past.
Multiple PAN Cards:
Another reason for linking PAN with Aadhaar is to reduce the occurrence of individuals or entities applying for multiple PAN cards in an effort to defraud the government and avoid paying taxes.
By applying for more than one PAN card, an entity can use one of the cards for a certain set of financial transactions and pay taxes applicable for those. Meanwhile, the other PAN card can be used for accounts or transactions that the entity wishes to conceal from the Income Tax department, thereby avoiding paying tax on them.
By linking the PAN and Aadhaar card, the government will be able to link the identity of an entity through his/her Aadhaar card, and subsequently have details of all financial transactions made through the linked PAN card. If there are multiple PAN cards registered under the same name, the government will be able to identify the same and take corrective action.
Deadline for linking of Aadhaar and PAN
The linking of Aadhaar with PAN is a mandate for processing of returns. The extended deadline for linking the two was fixed at 30 June 2018 which has now been further extended to 31 March 2019. Given that the deadline has been extended, individuals who are yet to carry out the linking have got some additional time to carry out the linking.
Click on the link below to know HOW TO LINK AADHAR WITH PAN
https://thetaxtalk.com/2019/02/21/how-to-link-aadhar-with-pan/
Article Assistant
Maitri Badani
(Team SSRPN)
