Tuesday, June 25, 2013

PAN Card:Getting a PAN set to be tougher as govt plans more stringent verification

Ministry officials say there are gaps in the current process and the idea is to make the system foolproof

Getting a Permanent Account Number (PAN) is going to get a bit tougher, with the income-tax (I-T) department gearing up to make the verification process more stringent, after some cases of fraud came to its notice.

Ration cards and rent receipts might no longer be accepted as proofs of identity and address. The tax department might also ask for proof of date of birth for issuing a PAN card.

Instead of a rent receipt, a rent agreement along with proof of address of the owner would be accepted. Aadhaar number, gas connection documents, and a certificate issued by the employer in a prescribed format would be accepted as identity/address proof after changes to the income tax rules are made shortly.

The proposed move comes after the Economic Offences Wing found some foreign nationals, particularly from Afghanistan, were using fake PAN cards as proof of identity. In most of these cases, a fake certificate of identity and address signed by a Member of Parliament (MP) was issued.

Finance ministry officials said there were some gaps in the current process and the idea was to make the system foolproof and robust. A notification to this effect could be issued next week and the new rule would come into effect immediately after that. It will apply only to fresh applicants.

According to rule 114 of the I-T rules, depository account statement, bank account statement /passbook, ration card, passport, voter identity card, driving licence, property tax assessment order and a certificate signed by an MP or a member of Legislative Assembly or a municipal councillor or a gazetted officer are accepted as proof of identity as well as address.

 “Currently, there is no prescribed format for the certificate issued by these authorities. Now, we will prescribe a format for PAN verification and issued of such certificates. It will be similar to the procedure followed in KYC (know your customer),” said an official who did not wish to be identified.

Currently, about 140 million people in India have PAN cards, while only 34 million of them file an income tax return. Many people who don’t file tax return get  PAN cards as they work as identity proof at many places.

About 1.3-1.4 million new PAN cards are issued every year by the tax department and the details of just 0.2 per cent of applicants (200 per 100,000) are verified by the I-T department. 

According to officials, in most cases of fraud, people furnished fake bank accounts, ration cards or certificates issued by gazette officers.

In March 2011, after finding a huge mismatch between the number of PAN holders and the number of tax return filings, the comptroller and auditor general had asked the I-T department to ensure that a single taxpayer was not issued multiple cards.

As part of the government’s drive against fake PAN, in order to verify the genuineness of KYC documents, third-party field verification is conducted after allotment of PAN.

Of the total PAN allotments, 96 per cent are under the category of individual applicants and a large number of fake PANs are also observed under this category.

For uniquely identifying the PAN allotted and to overcome the problems of fake PANs, issue of more than one PAN to an individual and to clean up the PAN database duplicates, capturing of Aadhaar in revised PAN application form 49A has been started on a voluntary basis. About 304,452 unique Aadhaar numbers have been seeded/incorporated into the PAN database.

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