In a bid to link 12-digit unique identity number – Aadhaar -- with the permanent account numbers (PANs), the income tax (I-T) department is “brainstorming to come up with more incentives” for taxpayers, which will also reduce the direct interface with the taxman.
Aadhaar is the number issued by Unique Identification Authority of India (UIDAI), which is unique to every individual as it captures biometric information like fingerprints and iris scan.
PAN is a 10-digit alpha-numeric number allotted by the I-T department and is mandatory for conducting tax transactions and high-value financial transactions.
The linking of Aadhaar with PAN would help the department to weed out duplicate PANs, and curb tax evasion.
A senior tax department official confirming the development said that the Income Tax Act does not have the provisions to make it mandatory to ask people to submit their Aadhaar numbers.
“The department is of a view that by offering more incentives, genuine taxpayers would be encouraged to provide Aadhaar numbers on ITR forms. This would also help the department to maintain the database where bank accounts, PAN, ITR, and Aadhaar would be linked, and it would help in forming a seamless tracking system to catch hold of scrupulous entities,” the official added.
As per the I-T department data, more than 240 million PAN numbers have been issued, and less than 10% of them file income-tax returns (ITRs). Out of this, around 11,00,000 have been declared invalid due to various reasons, including multiple issuance of PANs to the same taxpayer.
Last year, the I-T department had introduced a column in the ITR form, where the taxpayers can mention their Aadhaar number. But, it is voluntary.
In the PAN application form as well, there is an additional column to provide Aadhaar number. But taxpayers have an option to leave that blank as well.
As an incentive, the department said that linking of the Aadhaar with PAN would spare them from sending the tax verification papers to Bengaluru.
It added that providing Aadhaar number would help in faster processing of the returns and early issuance of tax refunds.
The department also activated the Aadhaar and net banking-based e-filing verification system for taxpayers to file the first appeal before a tax officer, in case of disputes.
With over one billion Aadhaar numbers generated, which covers around 93% of adults, so far, the department is hopeful that linking of Aadhaar with PAN would help in stopping duplication of more PANs, and thus the government is mulling more incentives to make the taxpayers voluntarily submit their Aadhaar numbers.
The department believes that a broad database of Aadhaar can be a ready source to cross-check the identities of genuine people.
Aadhaar, has also been identified as a new weapon in the government’s armour to fight black money, put an end to benami transactions and check frauds. So far 254.8 million bank accounts are linked with Aadhaar.
“Since it is now the largest online digital identity platform in the world, the tax department wants to use the Aadhaar database to expand tax research further,” the official added.