Biometrics identification enabled by Aadhaar proves the identity of the PAN holder. The move is expected to eliminate multiple PANs held by the same person with a motive to evade taxes. Linking the documents will make it easier for the Income Tax Department to analyse the income, assets and expenditure trends of individuals, and will also plug loopholes pertaining to tax evasions, if any.
CBDT, the apex direct tax policy making body under finance ministry had earlier said that from 1 April 2019 onwards, it will be mandatory to quote as well as link Aadhaar number while filing income tax return, unless one is specifically exempted from paying taxes. However, the deadline was extended by six months.
Till now, the government has extended the deadline to link Aadhaar number with PAN seven times. Earlier this year, the Supreme Court had also said the linkage of the two crucial documents is mandatory for filing income tax returns.
Aadhaar-linked PAN enables taxpayers to verify their returns through a one-time password sent to their phone numbers at the time of filing income tax 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.