NEW DELHI: The government said on Saturday that filing income tax returns and applications for permanent account number or PAN cards will, from July 1, mandatorily require Aadhaar cards, or at least the applicant’s enrolment number for the unique identity (UID).
The order came a day after the Supreme Court upheld the law, Section 139AA of the Income Tax Act, that mandates the possession of Aadhaar cards to file I-T returns, and the linking of the UID with PAN cards. “Those who do not have an Aadhaar will have to apply for one in the next 20 days if returns are to be filed after July 1. Those who wish to file the returns or apply for PAN before the deadline can do without Aadhaar, for the time being,” explained an officer.
But, based on the court ruling, the government has, for now, kept the linking of PAN cards with Aadhaar on the tax department website voluntary. The Central Board of Direct Taxes (CBDT), the policy-making arm of the tax department, said the apex court had only given “partial relief” to those who do not yet have an Aadhaar or an Aadhaar enrolment ID, and the taxman, hence, “will not cancel” the PAN of such individuals.
Cancellation of PAN will have several implications, including making bank accounts, mutual funds and insurance policies, non-compliant with know-your-customer (KYC) norms. Chances are that most PAN holders would have Aadhaar, which has a base of 115 crore Indians.
While there are 29 crore PAN holders, only around 4.5 crore file income tax returns. Most Indians file their returns by the July 31 deadline, although they have the option to file returns without paying any penalty till the end of the year. The government is expecting a spurt in filings this year on the back of demonetisation and other steps initiated to crack down on black money. The CBDT described the SC’s Friday judgment as “landmark”.