AADHAAR AND PAN

1. Context

2. The rationale behind linking PAN with Aadhaar

• The Income-tax Department announced linking PAN with Aadhaar after it came across instances where multiple permanent account numbers (PANs) were allotted to one person, or where one PAN was allotted to more than one person.
• To have a robust way of de-duplication of the PAN database, it was made mandatory for a taxpayer who is eligible to obtain Aadhaar, to quote his Aadhaar in the application form for PAN and return of income.

3. Who needs to link PAN with Aadhaar?

4. Who is not required to link PAN with Aadhaar?

• Any person of age 80 years and above;
• A non-resident as per the Income-tax Act;
• A person who is not a citizen of India.

5. What happens if PAN is not linked with Aadhaar?

• The person shall not be able to file the income tax return using the inoperative PAN.
• Pending returns will not be processed.
• Pending refunds cannot be issued to inoperative PANs.
• Pending proceedings as in the case of defective returns cannot be completed once the PAN is inoperative.

6. SEBI made it mandatory for investors to link their PAN with their Aadhaar

• Since PAN is the key identification number and part of KYC requirements for all transactions in the securities market, all SEBI-registered entities and Market Infrastructure Institutions (MIIs) are required to ensure valid KYC for all participants.
• All existing investors are required to ensure the linking of their PAN with their Aadhaar before March 31, 2023, for continual and smooth transactions in the securities market and to avoid consequences of non-compliance with the March 30, 2022, CBDT circular, as such accounts would be considered the non-KYC complaint, and there could be restrictions on securities on securities and other transactions until the PAN and Aadhaar are linked.
• Besides the consequences, the person may find difficulties in doing other financial transactions such as with banks, as PAN is an important KYC criterion for these transactions.

7. About Aadhaar

• The Aadhaar card is a 12-digit unique number issued by the Unique Identification Authority of India (UIDAI).
• It contains biometric information, such as fingerprints and iris scans, along with demographic information, including individuals' addresses and date of birth.
• The Aadhaar card serves as proof of identity and is valid anywhere in India for identification purposes. Having an Aadhaar card is compulsory while applying for a new PAN card or filing Income tax returns.

Source: Bank Bazar

8. Eligibility criteria for an Aadhaar card?

• Any Indian resident irrespective of his/her gender and age can enroll for an Aadhaar card.
• As per the Aadhaar Act 2016, Indian citizens need to reside in the country for 182 days or more in the year preceding the date of enrolment.
• Non-resident Indians (NRIs) and Overseas Citizens of India (OCI) are not eligible for an Aadhaar card. If NRIs and foreigners satisfy the minimum duration of stay as per the aforementioned Act, they can apply for an Aadhaar card.
• Minors, too, can apply for an Aadhaar card. Children under the age of 5 will get the Blue Colour Aadhaar, which needs to get updated after they become 5 years old.

9. What is Masked Aadhaar?

• Masked Aadhaar is similar to a regular Aadhaar with the difference that the Aadhaar number is partially hidden.
• Only the last four digits of the Aadhaar number are visible and the rest are crossed.
• It basically means replacing the first eight digits with some characters like 'xxxx-xxxx' while only the last four digits of the original number are visible.
• Other details on the Aadhaar card remain the same such as the name, date of birth, gender, address, and QR code.
• One can download an Aadhaar card easily online.

10. About PAN Card

• PAN Card is a permanent Account Number that consists of 10-digit alphanumeric characters and is assigned to all taxpayers in India. It is issued under the Indian Income Tax Act, 1961 by the Indian Income Tax Department under the supervision of the Central Board for Direct Taxes (CBDT).
• Basically, a PAN card is an electronic system in which all the tax-related information of a person or company is recorded against a single PAN number.
• For major financial transactions, a PAN card is mandatory like opening a bank account, selling or purchase of assets, etc. That is why a PAN card provides the details of the account holder in a unique way.
• Out of these 10 digits of PAN card: the first five figures represent alphabets, the next four digits are numbers and the last number is again an alphabet. All these digits have some meaning and reveal the information of the account holder.

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