New Delhi: Pressure is mounting on income tax assessees to link their Aadhaar with permanent account numbers (PAN) numbers as the voluntary compliance period for the requirement introduced in this year’s budget ends on Friday.

From 1 July, quoting Aadhaar, the 12-digit identification number issued by the Unique Identification Authority of India (UIDAI), is compulsory for obtaining PAN and for filing tax returns.

Biometrics identification enabled by Aadhaar proves the identity of the PAN holder and helps tax authorities to crack cases of multiple PANs held by the same person with the idea of tax evasion.

Also read: How to link your Aadhaar and PAN details to file income-tax returns

“Aadhaar is a more broad-based identification tool than PAN. Compulsory linking of the two will enable the tax department to collect and analyse more data for tax policy making and in its administration," said Neeru Ahuja, partner at Deloitte Haskins and Sells Llp.

Analysing the profile of income, assets and expenditure trends of individuals is of significance to the tax department considering the fact that historically, only a small part of India’s billion-plus population has been paying income tax.

According to an official of the tax department, who spoke on condition of anonymity, India had about 50 million people who file income tax returns, and about 65 million who paid income tax as of the end of 31 March 2017. This is a significant improvement over the 39 million people who filed income tax returns for the 2013-14 financial year.

The rise in the number of return filers was achieved by using IT tools in analyzing data and reaching out to non-filers. The number of taxpayers are higher than the number of return filers as many individuals, whose taxes are deducted at source by their employers, do not file returns. Even if taxes are paid, non-filing of returns is an offence, which could attract a penalty of Rs5,000-10,000 depending on the delay in filing it.

The tax department had on 10 June clarified that the relief granted by the Supreme Court on the previous day regarding non-cancellation of PAN for not linking Aadhaar with it was applicable only in cases of people who do not have Aadhaar and do not wish to obtain it for the time being. Their PAN cards will not be treated as invalid. For tax filing, Aadhaar is mandatory from 1July.

Aadhaar-linked PAN enables taxpayers to verify their returns through a one-time password sent to their phone numbers at the time of filing returns. This makes return filing easier as there is no need for an e-filer to send a signed physical copy of the return to the department, completing the legal formality of filing. Aadhaar and the password performs the verification function of an assessee’s signature in a physical copy of the return that pledges the information furnished to be true.

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