The tax department also proposes that the identities of such blocked PANs be circulated to the registrar of properties ‘with a request for not allowing any registration of immovable properties where such PANs are involved’. Photo: Pradeep Gaur/Mint
The tax department also proposes that the identities of such blocked PANs be circulated to the registrar of properties ‘with a request for not allowing any registration of immovable properties where such PANs are involved’. Photo: Pradeep Gaur/Mint

Tax department plans to block PAN, LPG subsidy of wilful defaulters

The tax department has asked taxmen to take aggressive steps against wilful tax defaulters, including blocking their PAN and not allowing them to register immovable property where PAN is compulsory

New Delhi: The tax department is tightening the noose on wilful tax defaulters, following the lead of banks that are waging a similar battle against loan defaulters.

The tax department has asked taxmen to take aggressive steps against wilful tax defaulters, including blocking their permanent account number (PAN), withdrawal of cooking gas subsidy and not allowing them to register immovable property where quoting of PAN is compulsory.

It has also asked the taxmen to share such details with credit information bureaus like Credit Information Bureau (India) Ltd (CIBIL) to ensure that defaulters do not get loans and overdrafts from banks and financial institutions. Further, it envisages getting access to CIBIL’s database for taxmen to get a bird’s eye view of the financial position of the taxpayer.

This follows the tax department’s steps to publicly disclose names of wilful defaulters on its website as well as in newspapers.

“It is suggested that after due notice, PAN of such defaulters should be blocked in our system, in such a way that these defaulters should not be allowed to file their return of income, which means that they cannot avail the benefit of carry forward of business loss and losses under other heads where filing of return of income u/s 139(1) is mandatory," said the department’s action plan.

The plan talks about clamping down on subsidies like the one for cooking gas for such defaulters. With the subsidy amount directly credited to the bank accounts (which are linked to PAN) of the beneficiaries under the direct benefit transfer scheme, the tax department is looking to block such subsidies to defaulters.

It also suggests circulating the list of blocked PANs to the registrar of properties to ensure that no registration of immovable properties happens under them.

B.M. Singh, former chairman of the Central Board of Direct Taxes, said the plan may be a non-starter.

“I am not sure if the Income Tax Act allows blocking of a PAN card. There are many practical difficulties to implement such a move. For starters, how is a wilful tax defaulter defined? And won’t auction of the wilful defaulter’s properties be better to recover the dues," he said.

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