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Making Sense Of The Aadhaar Card For Filing Income Tax Returns

Here’s everything you need to know.

11/05/2017 8:20 AM IST | Updated 15/05/2017 11:15 AM IST
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The government of India recently announced a few changes that will affect the way you file your income tax returns. These changes have, predictably, sent taxpayers into a bit of a tizzy. Firstly, quoting of the Aadhaar number has now been made mandatory while filing income tax return. Secondly, you're now required to link your Aadhaar card with PAN to file income tax returns. The question that taxpayers have is—why the government is insisting on linking on Aadhaar with PAN? After all, the PAN number itself was good enough for income tax purposes all this while.

Even if you don't possess an Aadhaar card, you can still file your return by quoting your Aadhaar acknowledgment number.

The answer to this is that the move was initiated by the government mainly to curb tax evasion through the use of multiple PAN cards. But if your PAN card is linked to Aadhaar, then you cannot avoid paying taxes. Aadhaar is built as a foolproof identity of a citizen, as it cannot be duplicated. This will help in ensuring transparency. But while implementing these amendments, many people have faced problems.

Let us address these problems

You don't have an Aadhaar card

It is now mandatory to quote the Aadhaar number while filing your income tax returns, but there are still people who haven't applied for one yet. If you're one of them, it is better to apply for your Aadhaar card right away.

If you've applied for one and still haven't received it at the time of filing taxes for this year, you can quote the 14-digit Aadhaar enrollment number mentioned in your Aadhaar acknowledgment slip. So even if you don't possess an Aadhaar card, you can still file your return by quoting your Aadhaar acknowledgment number.

You are unable to link Aadhaar with PAN

It is compulsory to link Aadhaar with PAN before filing your income tax return. Taxpayers have been facing a lot of issues while linking the Aadhaar with PAN, mainly due to name mismatch in the documents. For instance, some have initials before their name on their PAN card, and on Aadhaar, their initials are expanded. For example, if the name on PAN card reads "R. Manavar Murali", on the Aadhaar card it may read "Ramanujan M Murali." Another is that Aadhaar card does not recognise special characters such as the apostrophe in "D'Souza," which the PAN card accepts.

If you find yourself in one of these situations, you are required to update your name wherever it is wrong. Here are two alternatives:

  1. If your name on the PAN card requires correction, you can apply for PAN correction through the NSDL website. Select option "Changes/Correction in existing PAN data" in application type. Fill the required details, submit online, and send the valid documents. The fee for processing a PAN application is ₹107 (₹93 + 15% service tax). Here is the complete procedure of online correction on PAN card.
  2. The second option to correct your data is updating Aadhaar details. You can update the data in Aadhaar either by submitting your request online or offline. Updating Aadhaar details is completely free. If you choose to use the online mode, then it is mandatory that your mobile number is linked to Aadhaar card database. That's because UDAI will send you a One-Time Password (OTP) and sometimes might call you for verification. You can change your name, gender, date of birth, address, mobile number and e-mail id. Here is a link for further information on updating your Aadhaar details.

To make the process even simpler, the Income Tax Department is also planning to introduce a new option on the e-filing portal—taxpayers can choose to link the Aadhaar without changing the name by opting for an OTP, provided that the year of birth of the person matches in both the documents.

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Update: According to a new notification by the Central government, dated 11 May 2017, certain individuals do not have to quote their Aadhaar number/enrollment ID while applying for PAN or filing of income tax returns:

  • Those residing in the states of Assam, Jammu and Kashmir, and Meghalaya.
  • Non-residents of India (NRI), as per income tax laws

  • Those who are 80 years old and beyond.

  • Those who are not citizens of India.

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