The Indian government has intensified efforts to streamline financial systems and curb fraudulent activities by implementing stringent penalties for violations of the Permanent Account Number (PAN) and Aadhaar. A key measure is the imposition of a Rs 10,000 penalty for specific offences under the Income Tax Act, of 1961.
Legal Framework: Section 272B of the Income Tax Act
Section 272B addresses penalties for non-compliance with provisions concerning PAN. The law stipulates that:
Possession of Multiple PANs: Individuals are prohibited from holding more than one PAN. Violation can lead to a penalty of Rs 10,000.
Incorrect PAN/Aadhaar Information: Providing false or incorrect PAN or Aadhaar numbers in documents where quoting these identifiers is mandatory can also attract a Rs 10,000 penalty.
Offenses Leading to Penalties
Holding Multiple PAN Cards:
Each individual or entity is permitted only one PAN.
Possessing multiple PANs, whether due to oversight or deliberate action, is an offence.
Providing Incorrect PAN or Aadhaar Numbers:
Mandatory transactions, such as filing Income Tax Returns (ITR), require accurate PAN or Aadhaar details. Quoting incorrect numbers, intentionally or unintentionally, can result in penalties.
Failure to Quote PAN or Aadhaar in Specified Transactions:
Rationale Behind the Penalty
The government aims to:
Prevent Tax Evasion: Multiple PANs can facilitate fraudulent financial activities.
Ensure Accurate Identification: Correct PAN and UID details are crucial for tracking financial transactions and ensuring compliance.
Enhance Financial Transparency: Accurate information aids in monitoring and regulating financial activities effectively.
Steps to Avoid Penalties
Verify PAN Status: Use the Income Tax e-filing portal’s ‘PAN status check’ to ensure only one PAN is allotted.
Surrender Duplicate PANs: If multiple PANs exist, fill out the PAN Change Request form, listing the PANs to retain and those to surrender. Submit this with copies of the PAN cards to be cancelled.
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Ensure Accuracy in Documentation: Always provide correct PAN or Aadhaar numbers in all mandatory transactions.
Adhering to regulations regarding PAN and Aadhaar is essential to avoid substantial penalties. Taxpayers should remain vigilant about their financial identifiers and ensure compliance with legal requirements to maintain financial integrity and transparency.
