PAN card which allows the government to track high-value transactions may not be necessary any longer. The Finance Minister, Nirmala Sitharaman, in her maiden budget delivered on July 5 proposed on interchangeability of PAN and Aadhar to "enable a person who does not have PAN but has Aadhaar to use Aadhaar in place of PAN under the act."
Sitharaman said, "Mr Speaker, Sir, more than 120 Crore Indians now have Aadhaar. Therefore, for ease and convenience of tax payers, I propose to make PAN and Aadhaar interchangeable and allow those who do not have PAN to file Income Tax returns by simply quoting their Aadhaar number and also use it wherever they are required to quote PAN."
"The Income Tax Department shall allot PAN to such person on the basis of Aadhaar after obtaining demographic data from the Unique Identification Authority of India (UIDAI). It is also proposed to provide that a person who has already linked his Aadhaar with his PAN may at his option use Aadhaar in place of PAN under the Act."
"In order to track high value transactions, it is proposed to provide that the quoting and authentication of PAN/Aadhaar shall be mandatory for certain prescribed transactions. It is also proposed to provide that the person receiving relevant documents shall ensure correct quoting and authentication of PAN/Aadhaar for the prescribed transactions. To ensure compliance of these provisions it is also proposed to amend the relevant penalty provisions."
The Finance Minister further elaborated, "Presently, the Act provides for making PAN invalid if it is not linked with Aadhaar within a notified date. In order to protect past transactions carried out through such PAN, it is proposed to provide that if a person fails to intimate the Aadhaar number, the PAN allotted to such person shall be made inoperative in the prescribed manner after the date notified for the said linking."