Editorial: Won’t PAN out

Jan 30 2014, 03:14 IST
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SummaryLinking PAN with Aadhaar is a better solution

Given the growing number of fake Permanent Account Numbers (PAN), it is not surprising the tax department wants to do something about it. After all, to the extents its tax intelligence efforts—matching data on high-value purchases got from jewellery shops, for instance, with tax returns—are based on PAN data, it is critical for the number of fake PANs to be kept to a minimum. Right now, when the taxman matches data on high-value expenditure—where declaring a PAN is mandatory—it is finding the PANs quoted are often fake. That’s hardly surprising given that, while India has around 3.5 crore taxpayers, the total number of PAN cards issued is well over 20 crore.

Which is why it has now asked that those applying for a PAN number should personally visit the nearest PAN centre and have their documents verified—once verified, the documents will be returned, and the PAN applications processed. While that sounds perfectly reasonable, the problem is that physical verifications take away the simplicity of e-filing PAN applications today. Indeed, one of the unique selling propositions of the tax department to get people to file for PAN cards is that the process is simple and hassle-free. More important, while the physical verification of proof of identity and addresses may be seen as helping check fraud, it does nothing of the sort. After all, the ID proofs being submitted could also be fake. And even if it resolves the problem for future applications, given the way PAN numbers have grown, how do you deal with the existing 20 crore PAN cards?

A simpler solution, under the circumstances, is to use the Aadhaar number which even the Reserve Bank of India has accepted as a valid Know Your Customer (KYC) proof for banks. There are over 56 crore individuals who have Aadhaar numbers already and each of them are distinct since the Aadhaar system has a robust de-duplication process based on biometrics. If all existing PAN card holders are asked to submit their Aadhaar numbers, it would be a relatively simple task to identify the fake PAN card holders—after all, while it is possible to have multiple PAN cards under various names, it is not possible for any individual to have more than one Aadhaar number. When there is a perfectly good solution available, why is the taxman trying to find another one which, apart from being clumsy and time-consuming,

isn’t really going to

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