In the Union Budget 2019, Finance Minister Nirmala Sitharaman announced that the Aadhar card can now be used for the cash transactions of more than Rs. 50,000. Additionally, the Aadhar Card can also be used at all the places where PAN (Permanent Account Number) was mandatory. Ajay Bhushan Pandey, Revenue Secretary, said that banks and other institutions would upgrade their back-end to accept Aadhar at the place of PAN Card.
PAN card was made mandatory for cash transactions to curb black money. Bills, like hotel and travel, which exceed Rs. 50,000 require PAN while making payments. Additionally, PAN is also required while purchasing immovable assets of over Rs. 10 lakh.
FM Nirmala Sitharaman has proposed in the Union Budget to allow to use Aadhar Card in place of PAN in filing ITR (Income Tax Returns). She further added that this step would allow individuals who don’t have PAN card to provide their Aadhar number whenever required.
Ajay Bhushan Pandey said, “today, you have 22 crore PAN cards which are linked to Aadhaar.”
“You have more than 120 crore people who have Aadhaar. Then supposing somebody wants PAN, he has first to use Aadhaar, generate PAN, and then start using it. With Aadhaar, the advantage would be he now does not have to generate PAN. So this is a great convenience.”
Having said that, Pandey also confirmed that using Pan is also not phased out.
New Aadhar Pan Rules
- Aadhar can now be used for cash transactions of more than Rs. 50,000 and for all other purposes where PAN was required.
- Banks and institutions will upgrade their back-end to allow the acceptance of Aadhar in place of PAN. The step is taken for the ease of the taxpayers.
- Once the proposal is accepted in the Parliament, individuals can use Aadhar for financial transactions, ranging from mutual fund investments to buying gold.
- Aadhar can also be used for depositing cash worth more than Rs. 50,000 in bank accounts.
- Notably, Aadhar is a 12-digit Unique Identification Number that is allocated by the UIDAI (Unique Identification Authority of India) to the country’s residents.
- PAN is a 10-digit alphanumeric identity number allocated to the taxpayers by the IT department, under the supervision of the Central Board of Direct Taxes. Significantly, PAN also serves as an identity proof.