The government tryst with tax cheat is making another move by propelling the speculations about the use Aadhaar-PAN combo to track down corporate crooks.
Finance Minister Arun Jaitley on 22 March 2017 said linking Aadhaar with Permanent Account Number (PAN) and making it quote both numbers mandatory come 1st July 2017 is designed to curb frauds.
It is widely known that individuals resort to the splitting of income so as to get away with a lower rate of tax or preferably none at all given the slab rate of taxation applicable to them.
It is also commonly existed in the system of the fictitious person on which taxes are carved out, but such crooks brazenly resort to real PAN cards for them.
It is a singular failure of the system that fails to spot such non-existent persons while issuing PAN cards.
The government’s plan is to pin his faith on aadhaar instead of plugging the loopholes in the PAN issuance regime.
To be sure, Aadhaar is more robust vis-à-vis PAN in terms of its security features what with iris and fingerprints (biometric features) of an individual forming its integral part. Thus it is that much harder to obtain it than PAN.
But working on the lines of Aadhar and incorporate the safety features to beef up the security of the PAN would have been a better way to strengthen the motives of narrowing the lacunas in the system.
The government is completely ignoring that the bigger chunk of the tax evasion in the country is carried out by sophisticated crooks that hide behind incorporation.
The call from the finance ministry is to address the fringe of the problem by using the PAN-Aadhaar pincer to target individuals in the central. They should use the considerable regulatory acumen to defang such companies.
Better still, the Indian government must emulate the US system, Social Security Number (SSN) their aadhaar equivalent doubles up as PAN. Yes, in the US one does not have a separate tax identification number for filing returns and otherwise dealing with the income tax authorities. This is as it should be.