Union government has proposed making Aadhaar mandatory for filing income tax returns and for obtaining Permanent Account Number (PAN) through proposed amendments to the finance bill 2017.
The government on 21.03.2017 proposed making Aadhaar mandatory for filing of income-tax returns as well as for obtaining and retaining the PAN.
According to the amendments, from 1 July 2017, every taxpayer will have to quote Aadhaar while applying for a PAN and while filing income-tax returns. Further, existing PAN holders will have to disclose their Aadhaar numbers to the government by a date that will be specified later. Aadhaar enrolment number while filing ITR could also be accepted. In case of failure to intimate the Aadhaar number, the PAN allotted to the person shall be deemed invalid.
Vikas Vasal, Partner, Grant Thornton India LLP said that “Mandating Aadhaar number vis-à-vis Permanent Account Number (PAN) is a step in line with government’s intent to bring in tax transparency and to create an audit trail for various transactions undertaken by a taxpayer. Linking of Aadhaar and PAN would throw open any discrepancies in the reported transactions and provide a ready database to the revenue authorities for necessary action.”
The move is likely to roil activists who say the Aadhaar programme – the enrolment to a national database with biometric information such as fingerprints and iris scans – is meant to be voluntary, as declared by the SC in September last year.
The government’s move to link Aadhaar will help in finding tax evaders who have multiple PANs. Though the income-tax department has been seeding PAN with Aadhaar for the last few years, the pace of the linkage has not been very good.
The finance bill carries an unprecedented 40 amendments, according to PTI, and will also impact other laws such as RBI act and representation of people act. Political parties hit out at the tweaks, saying they were being done as ‘backdoor entry’.
The finance bill 2017 is expected to receive the Lok Sabha’s approval on Wednesday.