If you want to file your income tax return or want to apply for a PAN card after June 30, then better get your Aadhaar card made, otherwise you won’t be allowed to do so. The government has already said that the Aadhaar number or the applicant’s Aadhaar Enrolment ID number will now be mandatorily required for filing of income tax returns as well as for applications for PAN from July 1.
It may be noted that soon after the Supreme Court of India recently upheld the constitutional validity of the Aadhaar-PAN link provision, the Central Board of Direct Taxes (CBDT) clarified that every taxpayer eligible to obtain Aadhaar number will have to quote his/her Aadhaar number / Enrolment ID in the application form for allotment of PAN as also while filing income tax return from July 1, 2017, onwards. Also, every taxpayer who possesses PAN as on 1 July 2017 and who has Aadhaar number or is eligible to obtain Aadhaar number should intimate the Aadhaar number to the Tax Authority for the purpose of linking PAN with Aadhaar.
The Supreme Court had in fact upheld the constitutional validity of the Aadhaar-PAN link provision with a clarification that its ruling is subject to the final outcome from Constitution Bench ruling on the primary issue of validity of Aadhaar under Aadhaar law.
The SC held as under:
# Having regard to the intent and object of the law, the legislature is competent to make a provision optional in one law and mandatory under the other law.
# Aadhaar-PAN link provision is applicable to all individual taxpayers as one class and that constitutes a reasonable classification permissible under the Constitution.
# Keeping in mind the intent and object of Aadhaar-PAN link provision, there is a necessity to provide for consequences for noncompliance of Aadhaar-PAN link provision. However, “having regard to the severe consequences impacting day-to-day business, the SC concluded that till the time primary issue of validity of Aadhaar under Aadhaar law is decided by the Constitution Bench, an interim relief be granted against invalidation of PAN for non-compliance of Aadhaar-PAN link provision to taxpayers who are eligible to obtain but do not possess Aadhaar Number / Enrolment ID,” said an EY Tax Alert.
# Thus, taxpayers who have already enrolled under Aadhaar law as also those who volunteer to enroll will need to comply with Aadhaar-PAN link provision. And they also will have to face the consequences of default of noncompliance.
# Further, the SC also held that the consequences of non-compliance of Aadhaar-PAN link provision are to operate prospectively.
# The SC also observed that the legislature may consider to tone down the effect of the noncompliance of Aadhaar-PAN link provision by limiting the consequences.
After considering the SC ruling, CBDT clarified that:
# On or after 1 July 2017, every taxpayer eligible to obtain Aadhaar Number must quote Aadhaar Number / Enrolment ID in the application form for allotment of PAN as also while filing ROI.
# Every taxpayer who possesses PAN as on 1 July 2017 and who has Aadhaar Number or is eligible to obtain Aadhaar Number should intimate Aadhaar Number to the Tax Authority for the purpose of linking PAN with Aadhaar.
# In relation to above, partial relief is granted by the SC from invalidation of PAN of taxpayers who do not have Aadhaar Number and who do not wish to obtain Aadhaar Number for the time being. Therefore, PAN of such taxpayers will not be cancelled so that other consequences under the Indian Tax Laws (ITL) for failure to quote PAN are not to arise.
Thus, “the interim relief is available until the final outcome from the Constitution Bench ruling on the primary issue of validity of Aadhaar under Aadhaar law. The way the SC ruling is worded, interim relief will have significance only for individual taxpayers who, while not having Aadhaar Number, are not required to file ROI under the ITL. In case they become liable to furnish ROI under the ITL, they will have no option but to obtain Aadhaar Number / Enrolment ID and quote that in ROI,” said the EY Tax Alert.
Taxpayers who possess Aadhaar Number in any case is required to comply with Aadhaar-PAN link provision under all circumstances. Taxpayers who possess Aadhaar Number and are filing their ROI before 1 July 2017 are also required to intimate their Aadhaar Number to the Tax Authority for the purpose of linking PAN with the Aadhaar Number. Taxpayers who are covered by the CBDT Notification (which excludes certain category of taxpayers including foreign citizen or non-residents under the ITL, etc.) and who do not possess Aadhaar are not impacted by the present controversy.
Effectively, the SC ruling provides relief only in the following two scenarios where the taxpayers do not possess or do not volunteer to obtain Aadhaar and who:
# Are filing ROI before 1 July 2017; or
# Possess PAN but are not required to file ROI under the ITL.