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Tax accounts not linked to Aadhaar biometrics attract huge fines in India

Tax accounts not linked to Aadhaar biometrics attract huge fines in India

India’s Minister of State for Finance, Pankaj Chaudhary, has told parliament more than Rs 600 crore (about US$72 million) was collected in six months from people who failed to link their Personal Account Number (PAN) tax information with their Aadhaar biometrics.

Chaudhary disclosed the information in a recent written update to the country’s lower chamber of parliament, Business Standard writes.

The deadline to link PANs with Aadhaar was June 30, 2023, but as of January 29, up to 11.48 crore (over 110 million) of them had not been linked, the official said. This figure excludes the number of persons in categories not included in the linkage process.

The penalties were collected between July 1, 2023 and January 31, 2024, the minister disclosed.

The Income Tax Department had warned that all PANs not linked to Aadhaar by June 30 would be suspended and that only the payment of a Rs 1,000 (US$12) fine would enable their reactivation.

India considers nationwide Aadhaar authentication requirement for tax registration

In a related story, Indian authorities say there has been positive feedback from a pilot in some states for a system that seeks to enable the completion of some tax registration processes using Aadhaar biometric authentication.

The Goods and Services Tax (GST) Council says results of the pilot which has been going on in three states are encouraging as attempts to evade Input Tax Credit (ITC) and GST using faked identities are being caught, according to The Print. At the moment, an OTP-based authentication system is used to verify the ID of tax registrants.

The head of the Central Board of Indirect Taxes and Customs (CBIC), Sanjay Kumar Agarwal, is quoted as saying that because of the impressive results so far obtained in the pilot, “it seems now more and more states will opt for it or it can be made uniformly applicable to all the states because ultimately, it is the revenue which is impacted by fake registrations.”

A drive against tax registration fraud in India last year identified over 29, 000 firms involved in fraud claims, amounting to over 440 billion Indian rupees (around US$5.29 billion).

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