Connecting Aadhaar Number with Permanent Account Number under the Income Tax Act and challenges to be faced by foreign nationals filing tax returns in India
Aadhaar number is a 12-digit random number issued by the Unique Identification Authority of India (UIDAI) to the residents of India. Aadhaar is a strategic policy tool for social and financial inclusion, public sector delivery reforms, managing fiscal budgets, increase convenience and promote hassle-free people-centric governance. An individual needs to enrol for Aadhaar once and only one Aadhaar number shall be generated, as the uniqueness is achieved through the process of biometric de-duplication which involves taking fingerprints, Iris Scans and Facial photograph involving the individual to be physically present at the Aadhaar enrolment centres.
As per the newly inserted Section 139AA of the Finance Act 2017, if a person covered under this section want to file a return of income on or after July 1, 2017, it will be mandatory for him to quote the Aadhaar number in the return. Sub-section (2) of the new section states that if an existing PAN holder, who is eligible to obtain the Aadhaar number, fails to intimate the Aadhaar number, then the PAN allotted to the person shall be deemed to be invalid and the other provisions of this Act shall apply, as if the person had not applied for allotment of PAN and will be required for higher tax deduction on income earned from India. Further more he may be considered as an assessee in default.
As per the press release issued by Central Board of Direct Taxes on 5th April, 2017, it is clarified that mandatory quoting of Aadhaar Number/ Enrolment ID of Aadhaar application form shall apply only to a person who is eligible to obtain Aadhaar Number. Thus as per the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, only an individual who has resided in India for a period or periods amounting in all to one hundred and eighty two days or more in the twelve months immediately preceding the date of application is entitle to obtain Aadhaar. Such a person as per the Aadhaar Act, 2016 is termed as a Resident and all Residents as per such act are required to enrol for Aadhaar Number.
While residents, being Indian nationals and residing, in India may find the provision and its implementation to be quite simple, but the same may not be true for foreign nationals/expatriate employee’s who get covered under the definition of Resident as per the Aadhaar Act, 2016, but have left the country, creating practical difficulties to enrol for Aadhaar.
Apart from this, there may be certain other challenges, where the foreign nationals whose taxes are withheld in India, and are required to file return of income, but are not eligible to enrol for Aadhaar. Then in this case will the foreign national be allowed to file the return without an Aadhaar, or will he invite himself to assessments, for proving his non applicability for enrolment of Aadhaar.
The initiative taken by the Government to link Aadhaar to bank accounts/PAN/ ITR’s to speed up the move towards digital economy is a very welcome move. But the concerns exist around the administrative difficulties for foreign nationals and expatriate employees filing return of Income in India. Thus if an amendment or new provision is to be made effective, it should be done after taking care of all the practical difficulties which may impact the assessee without which the effectiveness and purpose for which a provision is introduced is diluted.
(Author ‘Anubhav Jain’ is associated with SKP Direct Tax & can be reached at – +91- 42528800 or on email@example.com for an For an in-depth discussion on the subject)
Disclaimer: This document contains information in summary form and is intended for general guidance only. It is not expected to be a substitute for detailed research or the exercise of professional judgment. Neither SKP nor its affiliates can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this document. On any specific matter, reference should be made to an appropriate advisor.