After the Supreme Court's landmark judgement making privacy an inalienable fundamental right, a question has cropped up as to whether Aadhaar is still required to be linked to PAN for acceptance and filing of income tax returns.
However, the court is yet to make it clear as to how this verdict impacts making Aadhaar mandatory for various financial transactions and also for filing of tax returns.
Experts say that the Supreme Court's 9 bench ruling has only clarified that 'privacy' is a fundamental right of every citizen of India.
Sonu Iyer, Partner & National Leader, - People Advisory Services, EY says that "The ruling by Supreme Court of India does not deal with the validity of either the Aadhaar Act or Section 139AA of the Income-tax Act making Aadhaar mandatory for income-tax filing and PAN."
A five member bench of the Supreme Court will now evaluate the validity of Aadhaar from the perspective of privacy as a fundamental right based on this judgement.
Iyer adds, "Unless a finding is made that Aadhaar is constitutionally not valid, tax return filers will need to link their PAN with Aadhaar by August 31, 2017 as per CBDT Press Release dated July 31, 2017 so that the tax returns can be processed. Thus, unless Aadhaar and PAN are linked, Income-tax returns filed will not be processed."
Chetan Chandak, Head of Tax Research, H&R Block, India, says that "Though this judgement has raised big questions on government's decision to make Aadhaar mandatory for various financial transactions, welfare schemes, PAN application, processing of tax returns, etc. But till the supreme court decides on the issues "whether Aadhaar violates the right to privacy of an individual" there is no change in the current situation. Therefore, the income tax department's decision mandating linking of their PAN with Aadhaar by August 31, 2017 still holds good and the returns will not be processed unless the PAN is linked with Aadhaar."
Therefore, those taxpayers who wish to file the tax return immediately or have filed it but have not linked their PAN and Aadhaar as yet will have to quote either their Aadhaar or Enrollment ID in their tax return without which they will not be able to file the tax return and delaying the tax return further may lead to paying additional interest on any pending tax dues.
Further as per the existing situation their return and consequent refunds will not be processed if they don't link their PAN and Aadhaar by 31st August. So it is in the interest of an honest taxpayer to be compliant with current law.
"But if one has serious concerns on privacy related issue and if he doesn't wish to apply for Aadhaar or quote it in his tax return he can wait till the Supreme Court decides on the validity of Aadhaar. But one should carefully analyse the related tax consequences before he does so." says Chandak.
Source:-The Economic Times
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