Will August 31 deadline to link PAN, Aadhaar stay after SC’s privacy ruling?

Income Tax officials in huddle with law ministry to study legal implication of last week’s order making privacy a fundamental right for Indians

Officials are unsure if the August 31 deadline to link Aadhaar and permanent account numbers (PAN) will hold after the Supreme Court ruled last week that privacy was a fundamental right for all Indians.

This file photo shows a visitor giving a thumb impression to withdraw money from his bank account with his Aadhaar or Unique Identification (UID) card during a Digi Dhan Mela, held to promote digital payment, in Hyderabad. (AFP)

“It’s too early to say,” an Income Tax official said on Tuesday when asked to comment on speculation that the deadline will need to be extended since the Aadhaar case was still to be heard in the Supreme Court.

The court’s August 24 ruling was the culmination of a debate on privacy that began with legal challenges to Aadhaar, a biometrics-based identification system. The specific issue of whether the programme violates the right to privacy will be heard by a separate set of judges soon.

Income Tax officials are studying last week’s order to determine the legal fallout for the government’s Aadhaar-PAN linking order.

“We are reading the judgement to see if it makes mandatory linking of Aadhaar and PAN for ITR legally untenable. We are in touch with the law ministry,” the tax department source said, on the condition of anonymity.

The government made it mandatory this year for people to link the two and declare their Aadhaar numbers when they filed their Income Tax returns (ITR) for the past financial year. The government then said that those who defied the order stood to lose their PAN numbers and faced criminal proceedings since their ITR would become invalid if Aadhaar was not disclosed.

But the top court in June restrained the government from carrying out the punitive actions. This, sources said, could be the basis for more legal challenges against the linking order.

Tax and law ministry officials are thus also exploring options to make changes to the law to fix loopholes, the source quoted above said.

One of the loopholes is in the “defective filing provisions” section that does not specify that ITRs will be invalid if Aadhaar is not declared, said legal experts. The provisions do not match the recently amended Section 135 AA of the Income Tax Act.

“SC is still hearing the petition against the mandate to link Aadhaar and PAN. Let us see how the next hearings go in the light of the judgement on right to privacy as a fundamental right,” said Gopal Krishna, one of the petitioners who challenged the Aadhaar programme.

There has been a 25% increase in tax returns filed for 2016-17. A total of 2.82 crore returns were filed by the August 5 deadline set by the tax department.

The Modi government has been increasing its list of areas where Aadhaar is now mandatory from payments under MGNREGA, to procuring new cooking gas connections to filing tax returns.