The Income Tax act was recently amended to include Sec 139AA making it mandatory for quoting Aadhaar number both in the application form for PAN and for filing IT returns. If a person does not have an Aadhaar number, he/she has to quote enrollment ID of Aadhaar application. The amendment also left a provision for the government to exempt certain categories from this rule. The government has now exempted four categories of individuals from this rule.

Who are the exempted inviduals?

The government has now issued a notification exempting the following four categories of individuals from the compulsory Aadhaar rule.

• Residing in the States of Assam, Jammu and Kashmir and Meghalaya
• Who are non-residents as per the Income-tax Act, 1961
• Whose age is eighty years or more at any time during the previous year
• Who are not citizens of India

Most government schemes that mandate compulsory aadhaar have exempted some of the North Eastern states owing to lower enrollment of aadhaar. As per data on 30^th April 2017, only 7% of Assam’s population have been assigned aadhaar while it is 9% for Meghalaya. In Jammu & Kashmir, this stands at 67%.

Aadhaar & Duplicate/Fake PAN numbers

The government has argued in the Supreme Court that money is laundered through shell companies using multiple PANs. The government also mentioned that 10 lakh PANs were cancenlled through random checks. Aadhaar linking to PAN, the government argued is to prevent such duplication of PANs. But the current amendment mandating Aadhaar for PAN & IT returns is applicable only to individuals and not companies.

As per the information shared by the government in the Lok Sabha, a total of 11.56 lakh PAN were cancelled because they were found to be duplicate as of April 2016. This makes for a mere 0.47% of all PANs in India at that time. In Delhi, 2.62% of all the PANs were cancelled as duplicate. In none of the other states, this was more than 1%. At least 0.3% PANs were cancelled in 16 states. In fact, cancelled PANs percentage was more than the national average in only 5 states. It has to be noted that this cancellation was done before Aadhaar linking. If the government was able to find duplicates and cancel them even when Aadhaar was not linked, it is intriguing as to why the government is now pushing for Aadhaar & PAN linking.