The government has done the right thing to set March 31 as the deadline for individuals to link their income-tax permanent account number (PAN) with Aadhaar, failing which PAN would become inoperative. Several deadlines have gone by, after the Supreme Court’s ruling mandating PAN-Aadhaar linkage, which is needed to weed out duplicate PANs. Minus such linkage, an individual cannot file her income-tax returns and her tax would be deducted at source at a higher rate. She cannot quote PAN, mandatory for sale or purchase of immovable property valued at 5 lakh or more, sale or purchase of cars, opening a bank account, applying for a credit or debit card, or buying units of mutual funds above a specified value. This might appear tough, but there is a price to pay for non-compliance.
About 35 crore people have PAN, over a billion have Aadhaar. The twain should meet. The bar on quoting of PAN would be revoked once the two identifiers are linked. So, this amounts to ‘suspended animation’ rather than permanent voiding of the unlinked PAN. Individual directors and authorised signatories too would have to comply. Given that Aadhaar has the potential to be abused, by using the tag to collate information on a person’s financial history, India needs to swiftly enact a robust data protection law.
Legal entities responsible for deducting and collecting the tax are mandated to quote the tax deduction or collection number TAN. The Company Identification Number, or CIN, issued by the RoC, is used to identify companies for many levels of information that the RoC holds. RBI’s legal entity identifier, a global reference number that uniquely identifies every entity or legal structure that is party to a financial transaction in any jurisdiction, also makes sense for better risk management.