The draft Income Tax Act has proposed significant changes related to Permanent Account Number (PAN) rules and income tax compliance. These updates could affect taxpayers across India, making it essential to understand the new regulations.
1. Mandatory Linking of PAN with Aadhaar
The draft Act emphasizes that linking PAN with Aadhaar will remain compulsory. Taxpayers without a linked PAN may face restrictions in:
- Filing income tax returns
- Conducting high-value financial transactions
- Opening bank accounts or investing in certain financial instruments
This aims to prevent tax evasion and streamline identification.
2. Changes in PAN Allotment Rules
The draft Act proposes revised eligibility and verification criteria for obtaining a PAN, including:
- Stricter KYC verification for first-time applicants
- Faster processing through wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital channels
- Provisions to suspend or cancel PAN in case of fraudulent use
3. Revised Penalties for Non-Compliance
New penalties are proposed for:
- Failing to link PAN with Aadhaar
- Providing incorrect or misleading information during PAN registration
- Not quoting PAN in financial transactions above the prescribed limits
Penalties are expected to encourage timely compliance and reduce misuse.
4. Streamlined PAN Update and Correction Process
The draft Act introduces simplified procedures for:
- Updating personal information linked to PAN
- Correcting errors in PAN details
- Linking PAN with multiple financial services
These changes aim to reduce administrative hurdles for taxpayers.
5. Impact on Financial Transactions
Under the new rules, quoting PAN will be mandatory for certain high-value transactions, including:
- Property purchases and sales
- Bank deposits exceeding the prescribed limit
- Investments in mutual funds or securities
This ensures better tracking of financial activity and improves tax transparency.
Conclusion
The proposed changes in the draft Income Tax Act regarding PAN reflect the government’s intent to enhance transparency, reduce tax evasion, and streamline compliance. Taxpayers should stay informed and ensure their PAN details are accurate and linked with Aadhaar to avoid penalties.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.
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