GS Paper - III

The Union Cabinet approved the PAN 2.0 Project for PAN to be made the “the common identifier for businesses” and to make PAN as the “single source of truth and data consistency”.

The existing PAN holders, which are around 78 crore in number, can upgrade their PAN cards. The number or PAN will remain the same for existing users, but the card will need to be upgraded, which the government said would be free of cost for the users.

What is the PAN 2.0 Project?

• The PAN 2.0 Project of the Income Tax Department, with a financial implication of Rs 1,435 crore, was approved by the Union Cabinet.
• Under the project, the existing PAN system will be upgraded completely, the IT backbone will be revamped and PAN will be made as a common business identifier for all digital systems of specified government agencies, Union Information and Broadcasting Minister Ashwini Vaishnaw said during the Cabinet briefing.
• There were repeated demands from the industry to have a common business identifier.
• They used to say they don’t want different (identification) numbers, a single number would be beneficial.
• The project will make efforts to make PAN as the common business identifier. All PAN/ TAN/ TIN will be clubbed under this system, Vaishnaw said.

What are the features of PAN 2.0?

• Apart from the QR-code feature for all new and existing PAN cards, the PAN 2.0 project aims to set up a unified portal along with a “mandatory PAN data vault system” for all entities using PAN data. This is being done for data protection and cybersecurity purposes.
• One of the most important features would be a PAN data vault system. The PAN related information is used by many entities such as banks, insurance companies.
• The PAN 2.0 project will enable technology-driven transformation of taxpayer registration services with an aim to improve ease of access and service delivery, an official statement said.
• This will be an upgrade of the current PAN/TAN 1.0 eco-system consolidating the core and non-core PAN/TAN activities as well as PAN validation service.

What does this mean for individuals and businesses?

• Existing users will have the option to upgrade for the PAN 2.0 card. The details about the application process and the timeline are yet to be released by the Income Tax Department.
• The QR-code feature on new and old PAN cards will mean an enhanced level of integration of financial transactions with the tax department.
• The QR code was introduced in PAN in 2017. The PAN 2.0 project intends to continue with this feature with enhancements, tax officials said.
• The existing PAN card holders can regenerate the old PAN card to the QR code-enabled ones. PAN holders having an old PAN Card without QR code have an option to apply for a new card with QR code.
• In PAN 2.0, the submission of applications is going to be online (paperless), a senior Finance Ministry official said.
• The upgrade of the PAN card for the existing users will be free of cost, Vaishnaw said at the briefing.
• Around 78 crore PAN cards have been issued so far, out of which 98 per cent belong to individuals.
• For businesses, this would mean a seamless, common system for filing various tax challans and returns.

What are the existing identification numbers of PAN and TAN?

• A 10-digit alphanumeric number, PAN, enables the Income Tax Department to link all transactions of a person with the department.
• These transactions include tax payments, Tax Deducted at Source (TDS) / Tax Collected at Source (TCS) credits, returns of income, specified transactions. PAN, thus, acts as an identifier for the person with the tax department.
• Once PAN is allotted, it remains the same forever. It is mandatory to quote PAN on filing of income tax return.
• TAN stands for Tax Deduction and Collection Account Number which is a 10-digit alphanumeric number issued by the Income Tax Department.
• TAN needs to be obtained by all persons responsible for deducting or collecting tax at source. It is compulsory to quote TAN in TDS/TCS return, any TDS/TCS payment challan, TDS/TCS certificates.