PAN out to a more efficient landscape

GoI is reportedly considering the pros and cons of a suggestion from financial institutions to drop the Permanent Account Number (PAN) requirement wherever Aadhaar is available for certain financial transactions. Easing the rules for the quoting of PAN makes sense, given that all bank accounts of individuals are seeded with an Aadhaar number. Aadhaar can become the single identifier that can be tagged to all financial transactions. The 2018 Supreme Court ruling upheld the PAN-Aadhaar linkage, required to weed out duplicate PANs. Minus this linkage, an individual cannot file her income-tax returns. Without PAN, her tax would be deducted at source at a higher rate. Now that PAN-Aadhaar linkage has been completed, there is a case for use of Aadhaar in lieu of PAN. As banks can check the PAN-Aadhaar linkage of a customer, it obviates the need for evidence of PAN when her Aadhaar number is in their records.

Over 129 crore people have Aadhaar, and about 43 crore people have PAN. Every sector handled by a central or state department must decide how swiftly they can leverage the Aadhaar system to make their application robust from the point of view of removing wrong and duplicate identities causing financial loss - and, worse, introducing security risks and vulnerabilities.

PAN will eventually become redundant, at least for individuals, and can be phased out. Concerns persist over keeping biometric data collected for Aadhaar secure. The Unique Identification Authority of India's (UIDAI) system needs to be robust to protect multiple aspects of citizen information that can get linked indirectly as in the case of health and finance. GoI must swiftly enact the personal data protection law, and empower citizens to secure redressal if their data is misused.