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Following Finance Minister Nirmala Sitharaman’s Budget, presented in the Parliament on July 5, a number of changes have been announced regarding Aadhaar and PAN interchangeability.

As per the announcement, Sitharaman had proposed quoting of Aadhaar in lieu of Permanent Account Number (PAN) for filing Income Tax Returns (ITR). So those not having PAN will soon be able to quote their Aadhaar number wherever the former was mandatory.

PAN, which was earlier mandated by law to link with Aadhaar for ITR is now an optional case. The move is likely to increase the taxpayer base, according to experts.

Founder & CEO ClearTax Archit Gupta suggests that  Aadhaar has a wider coverage than PAN. Thus, it may better serve to check evasion.

“Besides, people who have been facing issues due to name difference between PAN and Aadhaar will be relieved, so it is definitely a procedural relief for some. This is likely to increase the taxpayer base,” he adds.

As of now, over 41 crore PANs have been issued of which 22 crore have been linked to Aadhaar.

Filing of income tax return (ITR) with Aadhaar

Individuals who do not have a PAN will be able to quote Aadhaar instead while filing their income tax returns. Aadhaar can be used instead of PAN under the Income Tax Act.

Also read: No change in income tax returns forms: I-T department

Cash transactions above Rs. 50,000

Payments above RS 50,000 in cash to pay for a hotel or restaurant at any one time can be done by quoting Aadhaar number. As per the previous rules, furnishing of PAN was mandatory for such transactions.

Besides, payment above Rs 50,000 relating to travel to any foreign country or payment for purchase of any foreign currency at any one time currently requires PAN.

Further, those payments made to a mutual fund for purchase of units; a company for buying debentures or bonds; and the RBI for acquiring bonds also require PAN currently.

Purchasing property above Rs. 10 lakh

In view of the new rules, those buying immovable property worth more than 10 lakh will also be able to quote Aadhaar instead of PAN. Currently, PAN is mandatory for such property transactions.

Buying or selling Car

Currently, sale or purchase of a motor vehicle other than two-wheelers requires mandatory furnishing of PAN. In such cases too, the Aadhhar number will be applicable for transactions.

Debit/credit card application

One can also apply for a debit or credit card by furnishing only Aadhaar.

For NRIs

The government has also proposed to issuing of Aadhar card to NRIs having Indian passports when they arrive in India. Thus, they would not have to wait for 180 days — an earliere rquiremnet.

Who is still required to have PAN

A charitable trust required to show tax return under Section 139 (4A) of the Income Tax Act is required to obtain a PAN.

Those engaging in any business or profession wherein the total sale, turnover, or gross receipts are likely to

Those entering into specified financial transactions in which quoting PAN is mandatory are also currently required to furnish PAN.

The Income Tax Department has announced September 30 as the last date for assessees to link Aadhaar and PAN “unless specifically exempted”.

Also read: Aadhaar can be used in place of PAN; here is what you need to know


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