I-T dept tightens rules for issuance of PAN card

Verification process to be made robust after detection of frauds

Getting a Permanent Account Number (PAN) may not be easy now as the Income Tax department is all set to make the verification process more stringent after some cases of fraud came to its notice.

Ration card and rent receipts may no longer be accepted as a proof identity and address, while the tax department may ask for proof of Date of Birth for issuing a PAN card.

Instead of rent receipt, rent agreement along with proof of address of the owner will be accepted. Aadhaar number, gas connection, a certificate issued by the employer in a prescribed format will also 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 (EOW) found that 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.

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

As per rule 114 of the Income Tax 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 Municipal Councilor 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.

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Currently, about 14 crore people have a PAN card in India, while only 3.4 crore of them file their income tax return.

Many people who don’t file return get a PAN as it works as an identity proof at many places. About 13-14 lakh new PAN cards are issued every year by the tax department and details of just 0.2 per cent applicants (200 per one lakh) are verified by the department.  

Officials said in most cases of a fraud people furnished a fake bank account, ration card or certificate issued by a gazette officer.  

In March 2011, after finding a huge mismatch between the number of PAN holders and the number of tax return filings, the Comptroller & Auditor General had asked the Income Tax Department to ensure that a single taxpayer was not issued multiple cards.

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

The information of failed KYC verification is made available to field formations of department to mark the event in respect of PAN as ‘Fake’ through Assessee Information System application software.

Of the total PAN allotment, more than 96 per cent PAN allotments are under the category of ‘Individual’ applicants and maximum fake/duplicates 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 from 49A has been started on voluntary basis.

About 3,04,452 unique Aadhaar numbers have been seeded/incorporated into PAN database.