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Not linking Aadhaar with PAN could invite Income Tax dept’s wrath

LiveMint logoLiveMint 04-07-2017 Gireesh Chandra Prasad

New Delhi: Not linking Aadhaar with the Permanent Account Number (PAN) will not cost a defaulter his PAN but will land him in a list of suspects who suppress income and will therefore face scrutiny, as per a shift in the Income Tax Department’s approach to widening the tax base.

The tax authority will now specify a fresh date for linking the two and those who fail to do so will be regarded as a potential revenue risk to the exchequer, a person with direct knowledge of the matter said on condition of anonymity.

This fresh date is yet to be decided, the person said, adding that 1 July specified earlier for linking Aadhaar with PAN was the deadline only for tax filing purposes. From 1 July, income tax payers cannot file their returns without quoting Aadhaar or the enrolment number issued at the time of applying for Aadhaar.

Also read: 5 things to remember while filing income tax returns

The tax department’s decision not to invalidate PAN for not linking Aadhaar with it is in light of the Supreme Court’s 9 June order which granted partial relief to PAN holders with respect to its invalidation for default in linking the two identification numbers, while upholding Aadhaar requirement for filing tax returns.

The 12-digit Aadhaar number issued by Unique Identification Authority of India (UIDAI) identifies a person based on biometrics unlike other identification documents including PAN. Aadhaar, if linked to bank accounts as part of the know-your-customer (KYC) requirement, can give the tax authorities an idea of a person’s financial assets and spending patterns.

A look at the assets will give the tax department an idea of whether income is understated in the return. Reluctance to link Aadhaar with PAN therefore, will be seen as an attempt to deny information to the tax authority.

“The persons who do not comply after a cut off date for linking the two is specified, may be the persons holding multiple PANs,” said the person quoted above.

According to an official in the tax department, who also spoke on condition of anonymity, more than two crore income tax payers have already linked Aadhaar with PAN.

At the end of March 2017, there were about 65 million tax payers, although only about 50 million tax payers file returns.

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