This is the latest step in the Indian ITD’s multi-pronged strategy to enhance tax administration through E-governance initiatives.
The Central Board of Direct Taxes (CBDT; It provides essential inputs for policy and planning of direct taxes and is responsible for administration of direct tax laws through Income Tax Department or ITD) in India is developing a smartphone application which will allow tax assesses to pay taxes or apply for a Permanent Account Number (PAN). It will reduce the time required for the issuance of PAN to 5-6 minutes from the current time of nearly 2 weeks or more.
The PAN is a unique, 10-character alpha-numeric identifier issued to all judicial entities identifiable under the Income Tax Act 1961. PAN is the single largest identifier in India after Aadhaar (a 12 digit unique identity number linked to a citizen’s basic demographic and biometric information) for individuals and is the largest business identifier in the country for non-individual entities such as companies, trusts, firms, societies etc. It is mandatory for a variety of financial transactions, including opening a bank account, receiving taxable salary or professional fees and sale or purchase of assets, above specified limits. Following the surprise demonetisation move in November 2016, the central bank mandated the record of PAN for cash deposits above INR 50,000 (USD 745) in bank accounts not already seeded with PAN.
The app will enable users to pay taxes online, apply for PAN or track tax turns. It will utilise the Aadhaar-based e-KYC (Know your customer) facility to verify the applicant’s details through biometric identification such as thumb impressions. The e-KYC service is supposed to provide an instant, electronic, non-repudiable proof of identity and proof of address, along with date of birth and gender.
Till date, over 1.1 billion Aadhaar numbers have been issued and they are being used to get new SIM cards, opening bank accounts, transfer of subsidies and digital payments under the Aadhaar-enabled payment system (AEPS).
The PAN allotment process is currently carried out through a network of over 17,500 front offices (PAN centers). PAN verification facility is provided through CBDT’s e-filing server to Government departments and through the PAN Service Providers (UTITSL and NSDL) to different entities in the financial sector. According to the 2016 strategy document, the ITD is now able to allot PAN within a specified period of 9 days.
Continuing move towards e-governance in taxation
This is the latest step in the Indian ITD’s multi-pronged strategy to enhance tax administration through E-governance initiatives for (a) providing tax payer service and facilitation; (b) building internal capacity for efficient and faceless interface with all stakeholders; and (c) establishing a robust risk management strategy to detect and penalize non-compliance. The 2017-18 budget also stressed on the RAPID (Revenue, Accountability, Probity, Information and Digitisation) approach to maximise use of Information Technology.
To facilitate electronic transactions, a number of steps have been taken such as the launch of an electronic grievance redressal system last year, called ‘e-nivaran’ (e-resolution) in order to integrate all online and physical complaints, fast track taxpayer grievances and ensure early resolution of complaints.
According to news reports, the CBDT and the Ministry of Corporate Affairs have also tied up to issue PAN to new companies through a combined form in four hours. Separately, the tax department is developing an app to help pay taxes online and perform a host of other services such as apply for PAN or track tax returns.
News outlets also reported that beginning January 1, ITD has started issuing newly designed PAN cards that have added security features to make them tamper-proof.