Friday, February 7, 2020

Union Budget 2020: Aadhaar-Based Tax Verification Introduced To Ease Compliance

The Government of India has decided to launch Aadhaar based tax verification for its citizens. This decision was announced by Nirmala Sitharaman, the Finance Minister of India while presenting the Union Budget for 2020. PAN or the Permanent Account Number will be allotted online instantly by filling out the required application form. The Finance Minister said that steps to facilitate this decision are also in process. The interchangeability of PAN and Aadhaar was proposed during the Union Budget of 2019 by the Finance Minister.

Aadhaar ekyc And PAN Card

The Aadhaar card is issued by the Unique Identification Authority of India (UIDAI). This ekyc contains the biometric as well as demographic information of a citizen along with a 12 digit unique number for identification. The identity of an individual can be verified quickly through the process of Aadhaar authentication.

Aadhaar authentication is the process where the Aadhaar details of an individual are submitted to CIDR (Central Identities Data Repository) which functions under the UIDAI. If the details submitted matches the details stored on their database, the CIDR confirms it. Issued by the IT Department of India (Income Tax Department), the PAN card has a unique number of ten digits. PAN card is issued for the purpose of taxation and is essential today for all major financial transactions in India.

Aadhaar Based Verification Of Tax

  • The Government of India has expanded the use of Aadhaar card since the Supreme Court of India gave a new ruling saying that the Aadhaar ekyc can now be considered as a valid document for identification of an individual.
  • The Finance Minister of India announced in the Union Budget of 2020 that the Government has decided to introduce Aadhaar based tax verification for residents in India.
  • This decision will help to identify and remove those units that are non-existent as well as dummy units.
  • To motivate consumers to seek cash receipts/invoice the Government has decided to introduce a system of a cash reward.
  • To crack down frauds related to tax and identify the culprits Artificial Intelligence tools are being used at present. Input tax credit and invoice matching are done and on finding a mismatch above 10% of the fraudsters are identified and caught.
  • Aadhaar based tax verification can make this process easier as the individual’s details including name, biometric and demographic details and mobile number are stored in the Aadhaar database.
  • According to the UIDAI Aadhaar cards have been allotted to around 125 crore Indians.
  • Nearly 3 crore requests for Aadhaar authentication is received by the UIDAI every day.
  • Linking Aadhaar and PAN was put forward in the Union Budget of 2019.
  • The Aadhaar based tax verification introduced now is an extension of that decision.
  • Now a person who has linked her/his PAN with the Aadhaar ekyc can use her/his Aadhaar instead of PAN for tax verification.
  • The individual can file for IT returns by simply quoting the Aadhaar card number.
  • The government has further decided to launch a facility where the PAN card can be allotted instantly online using the Aadhaar of the individual.

In one of its verdicts last year, the Supreme Court of India said that the Aadhaar ekyc can be considered as a valid document that serves as a proof of Identity for the citizens of India. Currently, the government is expanding the use of Aadhaar for several other purposes of identification.

For more information contact us.
We, Finahub, are experts in Aadhaar related products and services like eSign, eKYC, Authentication, etc. If you want to know how your enterprise can start using it, please give us a call  @ 0484 2388285 or email us at [email protected]