How and why to link your Aadhar Card to your PAN Card - Motilal Oswal
How and why to link your Aadhar Card to your PAN Card - Motilal Oswal

How and why to link your Aadhar Card to your PAN Card

Over the last few months, there has been an aggressive campaign by the government urging individuals to link Aadhar card to PAN card online. While the deadlines for the same have been shifted considering the size of the task entailed, the actual linking will be mandatory from next year. As investors and tax assessees, there are two things that you need to understand. Firstly, How to link Aadhar Card to PAN card online? Secondly, what are the benefits of linking Aadhar with PAN?

As we are aware, the PAN card is a unique tax identification number issued by the Income Tax Department. This PAN is not only essential to file your IT returns but also for a variety of other activities like purchasing jewellery, buying property, taking a loan, opening a bank account, opening a demat account etc. Aadhar is a more recent phenomenon where the UIDAI has attempted to issue an identity card to every Indian, which is biometric and hence more secured. It behoves upon you to link Aadhar card to PAN card online to enable you to file your Income Tax returns in future years.

How to link Aadhar Card to PAN card online..

The process to link your Aadhar card to PAN card is entirely internet driven and the starting point will be to create a login and password for the same. The following is the process to follow…The starting point to link your PAN card with the Aadhar card is to login into the tax portal (www.incometaxindia.org) using your PAN card number as user name and a unique password. In case you are not yet registered on the Income Tax website, you will have to first register yourself before going ahead with the linking.

Once you login and enter the secured area of your Income Tax portal, there will be a dedicated section for you to link your Aadhar Card with your PAN Card. The entire verification happens online and there is no physical paper involvement at all.

The requirement is that your name in the Aadhar Card should exactly match with your name in the PAN Card. In case that is not the case, then there could be problems linking your Aadhar Card and your PAN card online.

To overcome the problem of name mismatch (which is quite common), there is a new facility available. In case of mismatch in name due to use of initials, you can still link the two documents through common date of birth and a common mobile number. The department sends an OTP code for confirmation and based on that the Aadhar Card can be linked to the PAN card. In fact, now the facility to link these two documents purely by SMS is also available.

Benefits of linking Aadhar with PAN..
While the process of linking Aadhar with PAN may appear to be a purely legal obligation, there are benefits of this linkage for the government and for individual taxpayers. Let us look at the key benefits from linking Aadhar with PAN..

Benefits of linking from the government's standpoint..

For the government, linking the Aadhar Card with the PAN card offers an audit trail. Now Aadhar card is a must for almost all transactions and the linkage provides a complete activity trail for the Income Tax department. This will be the key to plugging revenue leakages.

A lot of black money in the economy gets generated due to lack of audit trail. Since the spread of Aadhar is substantially larger than the spread of PAN cards, more people who have been evading taxes will be brought under the tax net and the tax base gets expanded.

From the point of view of the government, individuals will find it very hard to have multiple PAN cards which have been one of the key methods of evading taxes by spreading incomes across fictitious PAN cards. Thus another major loophole in the tax system gets plugged.

Benefits of linking to the individual tax payer..

For too long you have been complaining that you honestly pay the tax but many others get away without any tax burden. That will be largely curbed once the linkage of PAN and Aadhar is done. Government will be able to widen base and pass on benefits to you in form of lower tax rates.

For tax filing purposes, the PAN Aadhar linkage will act as a great facilitator as more complicated activities like sending the receipt to the IT department or e-signature will not be required. Aadhar e-verification will automatically do the job.

From a regulatory standpoint, you will not be able to file returns from next year unless your PAN card is mapped to Aadhar. However, leaving the regulatory part aside, you will also get a single page view of all your transactions through your IT login itself.

While there are likely to be teething problems, this linkage of Aadhar and PAN is a step in the right direction. Over the longer term, the individual taxpayers and the government should stand to benefit in a big way!
 

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