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Arun Jaitley defends Aadhaar move in Lok Sabha, says will prevent tax evasion

LiveMint logoLiveMint 22-03-2017 Remya Nair

New Delhi: Finance minister Arun Jaitley on Wednesday defended the government’s decision to make Aadhaar mandatory for filing of income tax returns (ITRs) and for obtaining and holding on to the permanent account number (PAN) calling it an anti-tax evasion measure.

In a debate on the Finance Bill in the Lok Sabha, he also defended the government’s decision to modify provisions related to search operations by the income tax department in the Finance Bill stating that no arbitrary powers have been given to the tax department.

The Lok Sabha on Wednesday passed the Finance Bill 2017.

Explaining the reason for making Aadhaar mandatory, Jaitley said that linking PAN with Aadhaar will help in weeding out multiple PANs held by one individual.

“One person has made five PAN cards. These are then used for tax evasion. That is why we have made Aadhaar mandatory. This reduces the possibility of this kind of tax fraud and evasion,” he said.

“Ninety-eight percent of adults in India have Aadhaar. One hundred and eight crore people have Aadhaar. Even if the person does not have Aadhaar, he has the option of quoting his Aadhaar enrolment number,” he added.

As part of its efforts to curb black money, the government on Tuesday had moved amendments to the Finance Bill 2017 proposing to make Aadhaar mandatory for tax filing purposes and for applying and retaining a PAN. It had also reduced the legal cash transaction limit to Rs2 lakh from Rs3 lakh, expected to adversely impact sectors like real estate, high end luxury and jewellery.

Explaining the changes in Section 132A of the Income Tax, Jaitley said it was important to protect the sources of information of the taxmen.

As per changes to Section 132A proposed in the Finance Bill, the taxmen will not have to disclose the reason, based on which the search was conducted, to any person, authority or appellate tribunal.

“The current situation was such that if any one challenged the search, then the sources of information had to be disclosed by the tax official. The sources of information started drying up. For instance, an employee will not disclose about the tax evasion by the head of the company for fear of disclosure. The change has been that now only the court can look into it the source of the information but not anyone else,” Jaitley said. “Before any search, if a tax officer gets information about undisclosed income with a particular tax payer, the reasons for such a move have to be written in the search order. There is no change in this. This still has to be recorded,” he said.

The finance minister also reiterated that agricultural income is not taxed in the country and neither will it be taxed in the future.

Earlier in the debate, the government was criticized for its decision to make Aadhaar mandatory for tax purposes.

“Supreme court still hasn’t decided (on making Aadhaar mandatory). You are giving subsidy through Aadhaar. That is fine. But in this case, the tax is being paid to the government. Why should Aadhaar be made mandatory,” questioned Bhartruhari Mahtab, member of Parliament representing Odisha and belonging to Biju Janata Dal.

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