Aadhaar is a unique identification number issued by the Indian government to every individual resident of India. It is based on demographic and biometric data of the individual and thus no duplicate number can be issued to the same individual.
Proposal to make Aadhaar mandatory for PAN and tax return filing
As a part of efforts to make the financial system more transparent and to curb the menace of black money, the Finance Minister has proposed changes to the Finance Bill,2017, whereby Aadhaar (Aadhaar number / Enrolment ID) would be mandatory, effective July 1 2017, for filing income tax returns and for application for PAN. This will be applicable to every person eligible to obtain Aadhaar. Exclusion for specified categories will be notified.
Additionally, all persons who are allotted PAN as on July 1, 2017, and eligible for Aadhaar number, would need to intimate their Aadhaar number to such authority in the form and manner as may be prescribed, on or before a date to be notified. PAN issued earlier will become invalid if a person fails to intimate his /her Aadhaar number within the prescribed time limit.
Who is eligible for Aadhaar enrolment?
As per the Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act, 2016, every resident is eligible to obtain an Aadhaar number by submitting his/her demographic and biometric information as part of the enrolment process. The central government may notify other categories of individuals who may be entitled to obtain an Aadhaar number.
Further, a ‘resident’ is defined to mean an individual who has resided in India for 182 days or more in aggregate in 12-month period immediately preceding the date of application for enrolment.
As Aadhaar enrolment is based on residency rather than citizenship, foreign nationals meeting the test of resident as defined above, will be eligible to obtain Aadhaar.
Likely challenges for foreign nationals
Documentation requirement for enrolling for Aadhaar
There is a list of documents that can be accepted as proof of identity and proof of address at the time of enrolling. While a passport would suffice as a proof of identity, there could be challenges with the documentation for proof of address. While there are 35 different documents prescribed for address proof, foreign nationals working in India may qualify for limited documents such as an Indian bank account statement, credit card statement and landline telephone bill or rental agreement. Many foreign nationals do not have bank accounts in India or live in employer-provided accommodations.
Sharing biometrics details
Foreign nationals could also have concerns in sharing their biometrics details with the government.
Likely challenges for Indian citizens abroad
As the person has to be present in India for submitting biometric information, Indian citizens who are overseas, may face challenges in providing biometric details for enrolling for Aadhaar.
Employers could also be challenged with TDS compliance for Indian employees working abroad and on India payroll where the employee’s PAN becomes invalid due to non-intimation of Aadhaar within the prescribed time.
Indian citizens qualifying for Aadhaar but yet to apply, may be unable to file their tax return in time. As a consequence, they may be exposed to additional interest, fee and penalty. Also, they may not be eligible to carry forward capital loss.
Expectation from the government
Considering the underlying objective of linking Aadhaar with PAN and the challenges especially for foreign nationals, should they be excluded from this additional requirement?
Alternatively, detailed guidelines specifying categories of foreign nationals requiring Aadhaar with relaxed timeframe should be prescribed to address the sentiments of foreign nationals in India. Further, the government should consider providing wider alternatives towards address proof such as Residential Permit.
There should also be provision of suitable options overseas for Aadhaar enrolment / relaxed time frame for Indian citizens living / working abroad.
Hopefully, these challenges would be appropriately considered by the government and necessary changes in the regulation / procedure be made available before the proposed deadline of July 1, 2017.
The government today notified a simpler, one-page form for filing income tax returns while making it mandatory to quote Aadhaar number and disclose bank deposits of more than Rs 2 lakh post demonetisation.
The Income Tax Return Form-1 (Sahaj) will replace the 7-page form, removing a plethora of columns on deductions from income claimed.
Sahaj can be filed by an individual having income of up to Rs 50 lakh from salary, house property and interest.
Currently, SAHAJ (ITR 1) is filed by salaried employees and ITR 2 by individuals and HUFs whose income does not include income from business.
The government has done away with form ITR 2A (used by individuals & HUFs not having income from business or profession and capital gains and by those who do not hold foreign assets).
Sahaj makes quoting of 12-digit biometric identifier Aadhaar number mandatory along with Permanent Account Number (PAN) and also seeks details of cash in excess of Rs 2 lakh that was deposited in bank accounts in the 50-day post demonetisation window.
ITR 2 and ITR 3 have a Schedule AL requiring assessees to declare their assets and liabilities at the end of the fiscal.
Only 6 crore out of 29 crore persons having PAN file income tax returns at present.
The e-filing facility for ITR-1 is enabled from April 1 and ITRs can be filed till the stipulated deadline of July 31.
While the old ITR form too had column to quote Aadhaar, the government has through an amendment to the Income Tax Act this week made quoting it mandatory.
“The Central Board of Direct Taxes has notified Income- tax Return Forms (ITR Forms) for the Assessment Year 2017-18. One of the major reforms made in the notified ITR Forms is the designing of a one page simplified ITR Form-1 (Sahaj),” CBDT said in a statement.
In the new form, parts relating to tax computation and deductions have been rationalised and simplified for easy compliance.
Besides personal details, an income tax filer needs to disclose only his income from salary or pension, one house property and other sources like interest. Thereafter, deduction claims are to be stated, followed by computation of taxable income.
Bank details are to be filled in the column following that. Details of advance tax, self-assessment tax payments and tax deducted at source come next.
In the column for providing bank details, cash deposited in excess of Rs 2 lakh during November 9 to December 30, 2016 has to be mentioned.
The rationalised ITR will “reduce the compliance burden to a significant extent on the individual tax payer,” the CBDT said, adding that the move would benefit more than two crore tax-payers who will be eligible to file their return of income in this simplified Form.
Instead of 20 columns of deductions in the old form, only four deductions claims in respect of Section 80C, 80D, 80G and 80TTA need to be filled.
“Simultaneously, the number of ITR Forms have been reduced from the existing nine to seven forms. The existing ITR Forms ITR-2, ITR-2A and ITR-3 have been rationalised and a single ITR-2 has been notified in place of these three forms,” it said.
Consequently, ITR-4 and ITR-4S (Sugam) have been renumbered as ITR-3 and ITR-4 (Sugam) respectively.
There will be no change in the manner of filing of ITR Forms and all the returns are to be filed electronically.
However, where return is furnished in ITR-1 (Sahaj) or ITR-4 (Sugam), an individual of the age of 80 years or more, an individual or HUF whose income does not exceed Rs 5 lakh and who has not claimed any refund in the return of income, have an option to file return in paper form.
At the time of filing the form, the taxpayer has to fill in PAN, Aadhaar number, personal information and information on taxes paid. TDS will be auto-filled in the form.
Post July 1, as per amendments to the Finance Bill 2017 as passed by the Lok Sabha, it would become mandatory for an assessee to provide the Aadhaar number or the number showing that he has applied for Aadhaar in the ITR.
Also ITR 4 (filed by Individuals & HUFs having income from a proprietary business or profession) will now be known as ‘Sugam’ and ITR-4S will be substituted.
“Going forward for AY 2017-18, the benefit of using the simplest ITR form i.e. ITR-Sahaj shall not be available to the following category of taxpayers: those earning total income of more than Rs 50 Lakh, those earning dividend income of more than Rs 10 lakh and those whose total income includes cash credits, unexplained investments, unexplained money etc,” said Nangia & Co Partner Suraj Nangia.
Similarly, ITR 4 (Sugam) cannot be used by the following category of taxpayers — those earning dividend income of more than Rs 10 lakh, those whose total income includes cash credits, unexplained investments, unexplained money etc.
“Owing to the aforesaid changes, taxpayers earning income for these sources will have to file a more detailed form containing disclosure in respect of their assets and liabilities, bank accounts etc,” Nangia said.
After making Aadhaar mandatory for filing income tax returns and applying for a permanent account number (PAN), the government has moved to make Aadhaar-based e-KYC (know your customer) mandatory for mobile phone connections.
In a notification late Thursday, the department of telecommunications (DoT) directed all mobile phone service providers to reverify existing customers, prepaid and postpaid, using their unique Aadhaar identity number and biometric details. They were told to complete the exercise by early next year.
Aadhaar-based e-KYC would also be mandatory for customers procuring new SIM cards.
It is another step towards making the use of Aadhaar all-pervasive in a country where it is already being used to better target beneficiaries of some government subsidies and welfare programmes.
On Tuesday, the government said Aadhaar would be mandatory for filing income tax returns as well as for obtaining and retaining the permanent account number (PAN) that taxpayers need to quote in their returns. From 1 July, every taxpayer will have to quote Aadhaar while applying for a PAN and when filing tax returns. Existing PAN holders will have to disclose their Aadhaar numbers to the government by a date that will be specified later. In case they fail to intimate their Aadhaar number, taxpayers will have the PAN allotted to them deemed invalid.
The move to link mobile phone connections to Aadhaar, administered by the Unique Identification Authority of India (UIDAI), comes after the Supreme Court said in February that all phone numbers in India should have verified users. The court said this during a hearing on a case brought by Lokniti Foundation, a non-profit organization.
Although the Supreme Court stopped short of saying that Aadhaar has to be used to verify users, the government seems to have decided that linking the unique identity number to mobile connections will be the best way to go about this.
“A meeting was held on 13.02.2017 in the department with the telecom industry wherein UIDAI, Trai and PMO representatives also participated to discuss the way forward to implement the directions of Hon’ble Supreme Court,” said the notification issued by DoT.
Trai is short for the Telecom Regulatory Authority of India and PMO for the Prime Minister’s Office.
Any unverified mobile phone number, or any number that is not linked to Aadhaar, will be illegal after 6 February 2018.
The government has directed telecom companies to intimate their existing subscribers about the re-verification process through all means possible, including through advertisements in newspapers and text messages.
The licensees have also been directed to send a “verification code” to the mobile numbers of subscribers to ensure that SIM cards are physically available with the subscribers before initiating the e-KYC process.
“I am unclear about the benefit that will arise out of the exercise where we will have to re-evaluate all the subscribers,” said Arpita Pal Agarwal, partner and leader—telecom industry practice—at consultancy PricewaterhouseCoopers India Pvt. Ltd. “It will add additional costs to the (telecom) sector, which it at the moment cannot afford.”
The Supreme Court previously said in an interim ruling that the use of Aadhaar should not be mandatory in delivering government benefits. Hearings in the case and a final ruling are still pending. The legislation that conferred statutory status on the Aadhaar project too said its use wouldn’t be mandatory.
“The government can decide with the legislature on making Aadhaar compulsory for the various schemes or activities. However, I don’t understand why are they making it compulsory for some schemes on their own when a decision is still pending before the Supreme Court. They can be easily challenged,” said Rahul Matthan, partner at law firm Trilegal and a Mint columnist.
According to former rural development secretary N.C. Saxena, the delivery of benefits offered by government schemes should be linked to Aadhaar.
Once passed by Parliament, the finance bill amendments will further tighten the noose around tax evaders and aid the government’s drive against black money.
The government on Tuesday proposed making Aadhaar, the unique number issued by the Unique Identification Authority of India, mandatory for filing of income-tax returns as well as for obtaining and retaining the permanent account number (PAN). It also proposed making cash transactions above Rs2 lakh illegal, reducing the limit from the earlier proposed one of Rs3 lakh, as per the official amendments to the finance bill 2017 moved by the government.
Once passed by Parliament, these amendments will further tighten the noose around tax evaders and aid the government’s drive against black money.
According to the amendments, from 1 July, every taxpayer will have to quote Aadhaar while applying for a PAN and while filing income-tax returns. Further, existing PAN holders will have to disclose their Aadhaar numbers to the government by a date that will be specified later. In case of failure to intimate the Aadhaar number, the PAN allotted to the person shall be deemed invalid.
The government’s move to link Aadhaar will help in weeding out tax evaders who have multiple PANs. Though the income-tax department has been seeding PAN with Aadhaar for the last few years, the pace of the linkage has not been very good.
Taxpayers who do not have an Aadhaar number are required to quote their Aadhaar enrolment number, the amendments said.
The finance bill is expected to receive the Lok Sabha’s nod on Wednesday.
The government’s proposal to cap cash transactions at Rs 2 lakh will create a paper trail for all high-value transactions and hit purchases of real estate, jewellery and luxury goods.
While presenting the Union budget, finance minister Arun Jaitley had on 1 February proposed that the legal limit for cash transactions would be Rs 3 lakh, in line with the recommendations of the Supreme Court-constituted Special Investigation Team (SIT) on black money.
Revenue secretary Hasmukh Adhia tweeted on Tuesday that the penalty for a violation would be a fine equivalent to the value of the transaction.
For subscribers, who are yet to seed Aadhaar and Bank details with their UAN, new Composite Claim Form (Non-Aadhaar) replaces the existing Forms No. 19, 10C & 31
With a view to make its services available to its stakeholders in an efficient and transparent manner, EPFO had introduced Universal Account Number (UAN). Subscribers, who seed Aadhaar and Bank account details, to their UAN have the facility to submit claim forms directly to EPFO without the attestation of employers by preferring claims in Forms No. 19 (UAN), 10C (UAN) & 31(UAN).
To add further convenience, these forms now have been further simplified and replaced with a single page Composite Claim Form (Aadhaar). This new Composite Claim Form (Aadhaar), can be submitted without the attestation of employers.
For subscribers also, who are yet to seed Aadhaar and Bank details with their UAN, new Composite Claim Form (Non-Aadhaar) replaces the existing Forms No. 19, 10C & 31. The new Single page Composite Claim Form (Non-Aadhaar), can be submitted with the attestation of employers.
Instruction sheet for filing the Composite Claim Form (Aadhaar):
1. The Composite Claim Form (Aadhaar) is applicable in cases where a member’s complete details in Form-11 (New), Aadhaar number and bank account details are available on the UAN Portal and UAN has been activated. Such members can submit this form directly to the concerned FPFO office, without attestation of claim form by the employees.
2. Purpose of advance and documents requited: (The purpose may be on of the following):
i) Housing Loan/ Purchase of site/ house/ flat or for construction/ Addition alteration in existing house/ Repayment of housing loan: No document is required. New Declaration Form/ Utilization Certificate required earlier has been discontinued.
ii) Illness of member/ family: i) Certificate of doctor and ii) Certificate by employer that ESIC facility is not available to the member may be submitted by the member.
iii) Marriage of self/ son/ daughter/ brother/ sister: No document/ Marriage card is required.
iv) Post Matriculation education of children: No document is required.
v) Lockout or closure of factory/ Cut in supply of electricity: No document is required.
vi) Natural calamity: No document is required.
vii) Purchasing equipment by physically handicapped: Medical certificate is required.
viii) One year before retirement: 90% of total PF balance can be withdrawn. No document is required.
ix) Investment in Varistha Pension Bima Yojana: 90% of total PF balance can be transferred to LIC. No document is required.
3. No revenue stamp (Rs 1) is required to be affixed by the member.
4. Income Tax (TDS) is deducted if the service is less than 5 years (60 months). No TDS is deducted in case the total balance is less than Rs 50,000. However, TDS is deducted @10% if the member submits PAN in such cases. In case PAN is not submitted, then TDS @34.608% is deducted.
5. The total service in the present establishment as well as previous establishment is counted and, therefore, it is advisable to merge all PF accounts.
6. Pension withdrawal benefit can be availed only if the service is less than 10 years.
Instruction sheet for filing the Composite Claim Form (Non-Aadhaar)
1. Purpose of advance and documents requited: (The purpose may be on of the following):
i) Housing Loan/ Purchase of site/ house/ flat or for construction/ Addition alteration in existing house/ Repayment of housing loan: No document is required. New Declaration Form/ Utilization Certificate required earlier has been discontinued.
ii) Illness of member/ family: i) Certificate of doctor and ii) Certificate by employer that ESIC facility is not available to the member may be submitted by the member.
iii) Marriage of self/ son/ daughter/ brother/ sister: No document/ Marriage card is required.
iv) Post Matriculation education of children: No document is required.
v) Lockout or closure of factory/ Cut in supply of electricity: No document is required.
vi) Natural calamity: No document is required.
vii) Purchasing equipment by physically handicapped: Medical certificate is required.
viii) One year before retirement: 90% of total PF balance can be withdrawn. No document is required.
ix) Investment in Varistha Pension Bima Yojana: 90% of total PF balance can be transferred to LIC. No document is required.
For subscribers, who are yet to seed Aadhaar and Bank details with their UAN, new Composite Claim Form (Non-Aadhaar) replaces the existing Forms No. 19, 10C & 31. The new Single page Composite Claim Form (Non-Aadhaar), can be submitted with the attestation of employers.
Instruction sheet for filing the Composite Claim Form (Aadhaar):
1. The Composite Claim Form (Aadhaar) is applicable in cases where a member’s complete details in Form-11 (New), Aadhaar number and bank account details are available on the UAN Portal and UAN has been activated. Such members can submit this form directly to the concerned FPFO office, without attestation of claim form by the employees.
2. Purpose of advance and documents requited: (The purpose may be on of the following):
i) Housing Loan/ Purchase of site/ house/ flat or for construction/ Addition alteration in existing house/ Repayment of housing loan: No document is required. New Declaration Form/ Utilization Certificate required earlier has been discontinued.
ii) Illness of member/ family: i) Certificate of doctor and ii) Certificate by employer that ESIC facility is not available to the member may be submitted by the member.
iii) Marriage of self/ son/ daughter/ brother/ sister: No document/ Marriage card is required.
iv) Post Matriculation education of children: No document is required.
v) Lockout or closure of factory/ Cut in supply of electricity: No document is required.
vi) Natural calamity: No document is required.
vii) Purchasing equipment by physically handicapped: Medical certificate is required.
viii) One year before retirement: 90% of total PF balance can be withdrawn. No document is required.
ix) Investment in Varistha Pension Bima Yojana: 90% of total PF balance can be transferred to LIC. No document is required.
3. No revenue stamp (Rs 1) is required to be affixed by the member.
4. Income Tax (TDS) is deducted if the service is less than 5 years (60 months). No TDS is deducted in case the total balance is less than Rs 50,000. However, TDS is deducted @10% if the member submits PAN in such cases. In case PAN is not submitted, then TDS @34.608% is deducted.
5. The total service in the present establishment as well as previous establishment is counted and, therefore, it is advisable to merge all PF accounts.
6. Pension withdrawal benefit can be availed only if the service is less than 10 years.
Instruction sheet for filing the Composite Claim Form (Non-Aadhaar)
1. Purpose of advance and documents requited: (The purpose may be on of the following):
i) Housing Loan/ Purchase of site/ house/ flat or for construction/ Addition alteration in existing house/ Repayment of housing loan: No document is required. New Declaration Form/ Utilization Certificate required earlier has been discontinued.
ii) Illness of member/ family: i) Certificate of doctor and ii) Certificate by employer that ESIC facility is not available to the member may be submitted by the member.
iii) Marriage of self/ son/ daughter/ brother/ sister: No document/ Marriage card is required.
iv) Post Matriculation education of children: No document is required.
v) Lockout or closure of factory/ Cut in supply of electricity: No document is required.
vi) Natural calamity: No document is required.
vii) Purchasing equipment by physically handicapped: Medical certificate is required.
viii) One year before retirement: 90% of total PF balance can be withdrawn. No document is required.
ix) Investment in Varistha Pension Bima Yojana: 90% of total PF balance can be transferred to LIC. No document is required.
2. No revenue stamp (Rs 1) is required to be affixed by the member.
3. Income Tax (TDS) is deducted if the service is less than 5 years (60 months). No TDS is deducted in case the total balance is less than Rs 50,000. However, TDS is deducted @10% if the member submits PAN in such cases. In case PAN is not submitted, then TDS @34.608% is deducted.
4. The total service in the present establishment as well as previous establishment is counted and, therefore, it is advisable to merge all PF accounts.
5. Pension withdrawal benefit can be availed only if the service is less than 10 years.
Forget the bulky paperwork, you can now apply, validate and activate new pre-paid and post-paid mobile connections using your Aadhaar card and fingerprint at the point of sale.
The government today issued e-KYC guidelines to make the online process of application and authentication faster and simpler for subscribers. In contrast to the existing document-based process, the move is intended to cut down time for SIM activation as KYC is verified instantly.
In e-KYC, a customer through her Aadhaar number and biometrics will online authorise UIDAI to provide demographic details such as name, address, date of birth and gender, along with the digitally-signed photograph, to the mobile operator.
“Digitally-signed electronic KYC data provided by UIDAI is machine readable, making it possible for licensees to directly store it as customer record in their database for the purpose of issuing a mobile connection,” a DoT notification said. COAI Director General Rajan Mathews felt that the move will be helpful for all stakeholders as it simplifies activation, eases verification process and enhances security.
“Earlier, the entire verification process would last 8-10 hours and it will now be greatly reduced,” he hoped. Bharti Airtel plans to start rolling out Aadhaar-based e-KYC solutions this week, MD and CEO (India and South Asia) Gopal Vittal said.
Vodafone India termed the e-KYC solution as “an instant, secure and green mobile subscriber verification project” and said all stakeholders will benefit from it. Customers will soon be able to walk in with their Aadhaar card in any of the Vodafone stores and walk out connected within minutes, the company statement read.
“For the consumer, instant activation means better experience and security of personal confidential information. For Vodafone, it will improve quality of sales as well as regulatory compliance. For the regulator, it not only means a green initiative, but hassle-free governance and accurate audit results,” said Sunil Sood, MD and CEO, Vodafone India.
According to Hemant Joshi, Partner, Deloitte Haskins & Sells, the move will bring down the cost of subscriber acquisition significantly as telecom companies will not have to spend on physical transportation of forms, verification, scanning and storage. “Also, it would help easier compliance and reduction in litigation on account of audit carried out by term cell,” Joshi said.
The Income Tax department has widened the ATM-based validation system for filing e-ITRs by taxpayers with the inclusion of Axis Bank, after SBI, as part of its measure to enhance the paperless regime of filing the annual I-T returns.
“Now, Electronic Verification Code (EVC) can also be generated by pre-validating Automated Teller Machine (ATM) provided by Axis Bank. SBI had activated the facility last month. Other banks are also expected to join soon,” a senior I-T department official said.
In May this year, the department had launched the bank account-based validation facility in this regard for those who have not availed the internet banking facility.
The new facility is available on the official e-filing portal of the department- http://incometaxindiaefiling.gov.in/ and will work by using the One Time Password (OTP) verification system as activated by the department last year by using the Aadhaar number.
These measures are used to validate the e-ITR so that the taxpayer does not take the trouble of sending the paper-based ITR-V by post to the Bengaluru-based Central Processing Centre (CPC) for final resolution and processing.
The new ITRs have been notified early this year and taxpayers can e-file their ITRs till July 31.
ITR-1 can be filed by individuals having income from salaries, one house property and from other sources including interest.
ITR-2 is filed by Individuals and Hindu Undivided Families (HUFs) not having income from business or profession.
ITR-2A is filed by those individuals and HUFs who do not have income from business or profession and capital gains and who do not hold foreign assets.
Aadhaar is a unique identification number issued by the Indian government to every individual resident of India. It is based on demographic and biometric data of the individual and thus no duplicate number can be issued to the same individual.
