I-T Returns and Aadhaar–What You Need To Know    Jun 12, 2017

Court rulings on financial issues are not always easy to understand, especially when it involves technical aspects. But as many of these could directly impact our everyday life, we must strive to correctly understand the court’s verdicts. You’ll probably recall, the Government had recently amended the Income Tax Act making it mandatory for the taxpayers to link their Aadhaar and PAN. It was decided that PANs of non-compliant citizens would be invalid. Moreover, it is compulsory for taxpayers to provide their Aadhaar number at the time of filing Income Tax (I-T) returns. According to the Government, this was done to (or “intending to”) curb the tendency to avoid filing taxes observed among citizens and to curtail the circulation of black money within the system.

Many social activists and opposition leaders had moved to the Court challenging the Government’s decisions.

In the past, the Supreme Court of India asked the Central Government to withdraw all notifications that made Aadhaar mandatory while opting for benefits under any Government-run scheme. Not only that, even various High courts have reprimanded the State Governments on making Aadhaar compulsory.

In 2014, Justice B.S. Chauhan told the Solicitor General, Mohan Parasaran, "I have received a lot of letters which say that Aadhaar card is mandatory despite court orders. We had already passed orders saying no one should suffer for not having Aadhaar card. How can you insist on Aadhaar card? If there are any instructions that Aadhaar is mandatory, it should be withdrawn immediately."

However, in March 2017, the Supreme Court diluted its earlier position issuing further clarification—"Minus the benefits under social welfare schemes, we think the government can insist on Aadhaar as identification document. If someone wants to open a bank account or get a mobile phone connection, it can insist on Aadhaar as there is no welfare scheme benefit involved in it. Why cannot the government insist on Aadhaar for filing of income tax returns? For availing benefits under schemes, Aadhaar cannot be insisted, but for other purposes we think it can be."

The latest court ruling hasn’t touched upon any of these aspects. However, it’s stayed the recently introduced amendments to the Income Tax Act partially. And, this has created doubts in the minds of many taxpayers. Many individuals aren’t sure whether or not their PAN cards will remain valid if they don’t link it with Aadhaar and doubt if they should quote Aadhaar while filing the I-T returns.

Read this out to get all your doubts clarified…

In simple words, no development stops the Government from insisting on quoting Aadhaar while filing I-T returns as well as linking Aadhaar and PAN. The only change that the latest ruling has brought in is that now the Government can’t invalidate the PAN cards of those who don’t comply with the linkage part.

In fact, the Government has issued a clarification after the Supreme Court passed a ruling on the linkage of Aadhaar and PAN. It highlighted the following:

  • From July 1, 2017 onwards, every person eligible to obtain Aadhaar must quote their Aadhaar number or their Aadhaar Enrolment ID number to file Income Tax Returns as well as for PAN applications.
  • Everyone who has been allotted a permanent account number (PAN) as on the 1st day of July, 2017, and those who have Aadhaar number or are eligible to obtain an Aadhaar number shall intimate his/her Aadhaar number to income tax authorities for the purpose of linking PAN with Aadhaar.
  • However, in case of non-compliance to the above point, the Court has given only partial relief to those who do not have Aadhaar and who do not wish to obtain an Aadhaar for the time being, their PAN will not be cancelled; so other consequences under the Income Tax Act for failing to quote PAN may not arise.
So the bottom line is, there’s no relief to those who have been reluctant to mention their Aadhaar number and link it with their PAN. That being said, it’s equally true that the Government will have to show greater commitment to protect the data privacy while it insists on the integration of these important documents. Over 115 crore people have Aadhaar already, so they will have to link it with their PAN. However, it won’t be mandatory for those who still don’t have Aadhaar, until the larger bench of the Supreme Court gives the verdict on the issue of privacy concerns associated with this linkage.

Those who seek help in associating their Aadhaar and PAN may follow 3-easy steps mentioned here.

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