PAN-Aadhaar Link Leading To Taxing Times; How Tech can Help

by CXOtoday News Desk    Jul 28, 2017


The date, July 1, 2017 is iconic for India not just due to GST enrollment but also because it was on the same day another tax provision came into effect, whereby Aadhaar (Aadhaar number/enrolment ID) was made compulsory for income tax return filing and for getting Permanent Account Number (PAN).

Some of those who would not be required to quoting Aadhaar for income tax returns filing and application for PAN are those residing in the states of Assam, J&K, and Meghalaya; a non-resident as per the Income Tax Act, 1961; of the age of 80 years or above at any time during the previous year; not a citizen of India.

PAN and Aadhaar Linked

All the people who received a PAN as on July 1, 2017 can get Aadhaar by intimating the Aadhaar number to the prescribed authority in prescribed form and manner.

A new intimation procedure has been introduced by CBDT through SMS, in-person visit to designated PAN service centers and portals of PAN service provider.

If these requirements are not met, the PAN will be considered invalid, though the provision of invalidating the PAN is on hold currently until announcements of an extended time-frame.

Bottlenecks while filing returns

When it comes to tax returns filing, there seems to difficulties in identifying people eligible for Aadhaar and those who are not required to quoting Aadhaar. Factors like residing state, residential status and age could be directly determined basis the inputs in the tax returns but in case of citizenship if specific field in the income tax returns are unknown, difficulties are faced by certain individuals.  

Difficulties seen by foreign citizens

PAN database is being used to identify citizenship of the individuals. Prior April 2012, a common PAN application form prevailed for both Indian and foreign citizens with a particular field to capture citizenship. However, the erstwhile citizens of India who may have applied for PAN earlier on could be identified as Indian citizens. If there is absence of specific requirement and process to get the citizenship status amended, the PAN database could show faulty status. 

Similarly, when it comes to Aadhaar number/enrolment ID, foreign citizens who are mistakenly categorized as Indian citizens in the PAN database would be unable to file their tax return online.

Difficulties faced by Indian Citizens

As citizens have to be present in India for providing biometric information, Indians who are oversees are facing difficulties for enrolling for Aadhaar.

Even when an Indian citizen who is sent to other country by the employer finds its challenging if he has left after November 2016 and is not enrolled for Aadhaar.  According to the income-tax provisions, the individuals would qualify as resident and ordinary resident (ROR) in India for FY 2016-17.

As per Aadhaar Act, the individual does not qualify for Aadhaar enrolment as the physical stay in India was less than 182 days in total during 12-month period after the date of application. The online tax return filing   possibility is at presently is not made available to these people and restraining them from filing taxing returns without quoting Aadhaar.

Technology to solve problem

FM Arun Jaitley said earlier this year that the tax department was resorting to use of technology to cut down interface with assessees. “This will cut down on compliance cost, cut down corruption and harassment and therefore incentivise the honest taxpayer.” He said the government was now working on ensuring transparency in political funding.

Addressing tax officials, the FM said a series of steps taken by the government were intended to expand the tax base, make processes more reasonable, make rates more reasonable, and enrich and empower the country.

The steps include: Visit – the official website for Aadhaar; Click on the ‘Update Aadhaar Details (Online)’ link in the ‘Aadhaar Online Services’ section; You will be redirected to the Aadhaar Self-Service Update Portal Enter your Aadhaar number and the text verification code and click ‘Send OTP’ You’ll receive a One-Time Password (OTP) on your registered mobile number Update your details with the correct info; Upload the supporting documents needed for the updated details

“You take these effective anti-evasion measures like linking of PAN with Aadhaar to avoid multiple PAN cards or to keep a watch on the nature of expenditure that the expenditure is compliant with the declared income of an assessee, you will find noncompliances being defended these days in the name of privacy,” Jaitley said.