In the Union Budget 2019, the Finance Minister had announced the interchangeability of PAN and Aadhaar. Here’s how it will affect your tax filing.
ITR Filing 2019: In the Union Budget 2019, the Finance Minister had announced the interchangeability of PAN and Aadhaar with effect from 1st September 2019. With a view to ease tax compliance by individuals, the individuals who do not have a PAN card but hold an Aadhaar number can quote and use the Aadhaar number instead of PAN to file their income tax returns.
The Union Budget has also proposed that PAN will be issued to individuals using their Aadhaar to file their returns. Also, individuals holding Aadhaar can quote it in all places and documents wherever they are required to quote and use PAN.
At present, generally, a taxpayer is required to quote and use PAN for the following important purposes: for registration on the income tax website, for filing of income tax returns, for entering into high-value transactions, and several others.
The Income Tax Department has made it mandatory to quote and use PAN for several transactions such as deposit of cash in bank accounts, opening of a Demat account, securities market transactions, purchase and sale of immovable property and various other financial transactions.
With the interchangeability of PAN with Aadhaar, the use of PAN is likely to decline. However, the Central Board of Direct Taxes (CBDT) Chairman has clarified that PAN would not become obsolete and that the interchangeability is only for facilitating the linking of Aadhaar with PAN.
Also, the Income Tax Department’s use and emphasis on technology with measures such as making available of pre-filled income tax returns, gathering information from banks, stock exchanges, mutual funds, etc. would be further facilitated through the interchangeability of PAN with Aadhaar. Henceforth, details of transactions undertaken through Aadhaar would also be available to the Income Tax Department against erring taxpayers.
Apart from tax filing, PAN is also required to make payment of taxes and for certain other tax compliances such as correspondence with the tax authorities in case of income tax notices, assessment, etc. It remains to be seen how the systems and functions of the Income Tax Department are modified to facilitate the use of Aadhaar in lieu of PAN.
Though the Finance Minister has laid the foundation for making Aadhaar a universal identifier, one would need to know that the usage of Aadhaar is not mandatory for various financial and banking transactions. The usage of Aadhaar is protected, with the storage of Aadhaar data and authentication restricted based on the consent of the individual. With the introduction of pre-filling of data in the income tax return and interchangeability of PAN with Aadhaar for return filing purpose, consequential changes may not take place in financial and banking systems, and therefore PAN will continue to be relevant.
Also, PAN can be interchanged with Aadhaar only in the case of individuals. The other taxpayers consisting of Corporates, Hindu Undivided Family (HUF) and other non-individual filers would continue to use PAN.
Courtesy: Financial Express