PAN 2.0 : A Comprehensive Overview

The Permanent Account Number (PAN) is a 10-digit alphanumeric identifier issued to individuals and entities in India by the Income Tax Department. PAN is used to track financial transactions like tax payments, TDS/TCS credits, and income returns, linking these activities to the Income Tax Department.

Obtaining a PAN is mandatory for various scenarios:

• Individuals whose income exceeds the taxable limit.
• Charitable trusts required to file returns under Section 139(4A).
• Businesses and professionals whose sales, turnover, or gross receipts exceed five lakh rupees annually.
• Individuals intending to participate in specific financial transactions where PAN is mandatory.
• Non-individual resident persons and associated individuals involved in financial transactions exceeding ?2,50,000 in a financial year.
• Penalties exist for non-compliance with PAN regulations. Failing to obtain a PAN when required, quoting an incorrect PAN, or providing an incorrect PAN to tax deducting/collecting entities can result in a penalty of ?10,000 under Section 272B of the Income-tax Act. Holding multiple PANs is illegal and individuals with multiple PANs must inform the Assessing Officer and deactivate any additional PANs.

PAN serves as a crucial tool for financial transparency and compliance within India’s financial and administrative systems.

It acts as a gateway for essential services in the digital economy, making it an integral part of daily life for individuals and businesses.

The Permanent Account Number (PAN) is a 10-digit alphanumeric identifier issued by the Income Tax Department of India. PAN is used to track financial transactions for tax purposes, such as tax payments, TDS/TCS credits, and income returns1. The PAN 2.0 project is a new initiative launched by the Indian government to modernize the PAN system. The main objective of the project is to make it easier for taxpayers to interact with the government and comply with tax laws.

New Features and Benefits of PAN 2.0

Unified Portal: The PAN 2.0 project introduces a unified portal for all PAN/TAN services. This single platform will replace the three separate portals currently in use for PAN-related services. This means users will only need to interact with one platform for all their PAN/TAN needs. The unified portal will host a comprehensive range of services related to PAN and TAN, including application, update, correction, online validation, Aadhaar linking, re-issuance requests, and more. It is intended to simplify access, streamline processes, and provide faster service delivery for taxpayers. The unified portal will also include a dedicated call center and help desk to provide support and address user inquiries and issues.

Eco-Friendly Processes: PAN 2.0 will implement completely online, paperless procedures, minimizing paperwork and promoting environmental sustainability.

Free Issuance and Faster Processing: PAN cards will be issued free of charge, and the processing time will be reduced. The upgraded electronic PAN (e-PAN) will be delivered directly to users’ registered email addresses at no cost. For those who require a physical PAN card, a specific request must be made, with a nominal fee charged for domestic and international delivery.

Enhanced Security: PAN 2.0 includes advanced security features, such as a PAN Data Vault, to safeguard sensitive personal and demographic information. This will reduce the risk of fraud and identity theft. PAN 2.0 also adopts global standards for data security and is compliant with key ISO certifications for quality, security, and service management.

QR Code Enhancement: All new PAN cards issued under PAN 2.0 will have a QR code, which has been part of PAN cards since 2017–2018. This will enable quicker validation of PAN details and ensure authenticity. Under PAN 2.0, the QR code will be enhanced with a dynamic code displaying the latest data from the PAN database. The QR code can be scanned using a dedicated reader application to verify details like photo, signature, name, parents’ names, and date of birth. Existing PAN card holders with older cards lacking a QR code have the option to apply for a new card with a QR code.

PAN 2.0 as a “Common Business Identifier”

PAN 2.0 aims to establish PAN as a universal identifier across various digital systems used by designated government agencies in India. It is intended to be a “common business identifier” to streamline interactions between businesses and various government agencies. This means businesses will no longer need to maintain multiple IDs for compliance and transactions, leading to reduced administrative overhead, minimized errors, and improved data consistency across platforms.

Additional Benefits

• Minimizing Duplicate PANs: Advanced logic in the new system will identify and minimize duplicate PANs. Holders of multiple PANs should deactivate extras as required by the Income-tax Act, 1961. Section 272B of the Income-tax Act imposes a penalty for taxpayers who fail to comply with PAN-related provisions, including having more than one PAN.
• QR Code Feature: The QR code has been a part of PAN cards since 2017-18. Under PAN 2.0, it will be enhanced with a dynamic QR code displaying the latest data from the PAN database. It verifies PAN details like photo, signature, name, and date of birth using a QR reader. This feature will help validate the PAN and its details through a specific reader application. When scanned, it displays the holder’s photo, signature, name, parents’ names, and date of birth.
• Global Standards for Secure and Seamless Services: The PAN 2.0 project adopts global standards to enhance taxpayer registration with seamless digital processes and strong data security. It ensures compliance with key ISO certifications for quality, security, and service management (e.g., ISO 27001, ISO 9001). The project streamlines PAN/TAN registration with simplified online processes, minimal documentation, and centralized databases, improving user experience while safeguarding data through robust security and international best practices.

Unified Portal for PAN/TAN: A Centralized Hub for Taxpayer Services

The PAN 2.0 project introduces a unified portal for all PAN/TAN services, designed to simplify access and streamline processes for taxpayers. This single platform will replace the three separate portals currently used for PAN-related services: the e-Filing Portal, the UTIITSL Portal, and the Protean e-Gov Portal.

The unified portal will host all end-to-end services related to PAN and TAN, including:

• Allotment of new PAN and TAN
• Updation and correction of PAN/TAN details
• Online PAN validation (OPV)
• Aadhaar-PAN linking
• Verification of PAN
• Request for e-PAN
• Request for reprint of PAN card
• Finding your Assessing Officer (AO)

This consolidation of services into a single portal is expected to eliminate delays caused by the current multiple systems and enhance the mechanisms for addressing grievances.

Benefits of the Unified Portal

The unified portal aims to deliver several benefits to taxpayers:

• Simplified Access: Users will have a single point of access for all PAN/TAN related services, making it easier to manage their tax-related information and requirements.
• Streamlined Processes: The centralized platform will facilitate seamless and paperless processes for PAN/TAN applications, updates, corrections, and other related services.
• Faster Service Delivery: The project aims to deliver speedy and cost-effective taxpayer services through the unified portal.
• Improved Grievance Redressal: The dedicated call center and help desk within the unified portal will provide a centralized system for addressing user queries and issues, ensuring faster resolution of complaints.

By centralizing all PAN/TAN services and streamlining processes, the unified portal under PAN 2.0 is expected to significantly enhance the efficiency and user-friendliness of the Indian taxpayer registration system.

QR Codes in PAN 2.0: Enhancing Validation and Security

While QR codes were introduced on PAN cards back in 2017-18, the PAN 2.0 project aims to leverage this technology further to enhance the security and validation process of PAN details.

Here’s a breakdown of the role of QR codes in PAN 2.0:

• Facilitating Quick Validation: The QR code on a PAN card enables quick and easy validation of the cardholder’s details. By scanning the QR code using a dedicated reader application, authorized entities can verify the authenticity of the PAN card and access the associated information. This is particularly helpful for businesses that need to verify the PAN details of their vendors or customers.
• Displaying Updated Information: Under PAN 2.0, the QR code on PAN cards will be dynamic, meaning it will display the latest data from the PAN database. This ensures that the information obtained by scanning the QR code is always up-to-date, even if the cardholder has updated their details, such as address or name, since the card was issued.
• Enhancing Security: The use of QR codes also contributes to enhancing the security of PAN cards. Since the QR code contains encrypted information linked to the PAN database, it makes it more difficult for fraudulent entities to create fake PAN cards or tamper with existing ones.
• Optional for Existing Cardholders: Existing PAN cardholders with older cards that do not have a QR code are not required to obtain a new card. However, they have the option to request a new card with a QR code if they wish to benefit from the enhanced security and validation features. This request can be made under both the current PAN 1.0 system and the upgraded PAN 2.0 system.

Information Accessible via QR Code

When a QR code on a PAN card is scanned using the dedicated reader application, it displays the following information:

• Cardholder’s photograph
• Cardholder’s signature
• Name of the cardholder
• Names of the cardholder’s parents
• Date of birth of the cardholder

This information allows for a comprehensive verification of the cardholder’s identity and helps to prevent fraud and misuse of PAN cards.

Impact on Taxpayers

• No need for a new PAN card: Existing PAN cards will remain valid. Taxpayers will not be required to apply for a new PAN card unless they need to update or correct information on their card.
• Free updates and corrections: Once the PAN 2.0 system is active, taxpayers can update or correct information like name, address, or email for free.
• Free e-PAN: The upgraded electronic PAN (e-PAN) will be sent to taxpayers’ registered email addresses free of charge.
• Optional physical PAN card: Taxpayers can request a physical PAN card for a fee.
• QR code for easier validation: PAN cards issued since 2017-18 already include a QR code. Older cards without a QR code will continue to work, but taxpayers can request a new card with a QR code to enable quicker validation.
• Unified portal for all PAN services: PAN 2.0 will consolidate all PAN-related services into a single, unified portal. This will simplify access for users and reduce delays.
• Improved security: PAN 2.0 introduces enhanced security measures, including a PAN Data Vault, to protect personal and demographic information.
• Dedicated support services: A dedicated call center and help desk will be available to handle taxpayer inquiries and issues.

Do existing PAN card holders need to update their PAN?

No, existing PAN card holders do not need to update their PAN. As per the rules, existing PAN cards will remain valid even after the upgrade. The government has stated that all existing PAN cards will remain fully operational under PAN 2.0. However, if someone desires updates or corrections to their PAN details, like name or address, they can request an update after the launch of PAN 2.0. Until then, updates can be made through Aadhaar-based online services or the current process (physical centers or online applications).

The holders of older PAN cards without QR codes may optionally request a new one, but it’s not mandatory. While older PAN cards will continue to be valid even without a QR code, cardholders can apply for a new card with a QR code under both the current PAN 1.0 system and the upgraded PAN 2.0.

Impact on Businesses

• Unified identification across platforms: PAN will serve as a common business identifier across government digital systems. This eliminates the need for businesses to maintain multiple IDs for compliance and transactions.
• Simplified tax compliance: The unified portal and QR code features will simplify tasks such as filing tax returns, verifying vendor PANs, and linking PAN with GST and other systems.
• Improved security and data integrity: Advanced cybersecurity features will protect sensitive business information and reduce the risk of fraud.
• Better grievance redressal mechanisms: The centralized help desk and call center will assist businesses with PAN-related queries and issues, ensuring faster resolution.
• Strengthening anti-evasion measures: PAN’s integration as a common identifier and its linkages to other systems will help detect and prevent tax evasion.
• Support for international transactions: PAN 2.0 is expected to streamline processes for obtaining PAN for non-resident entities and improve alignment with global digital systems.

Conclusion

The Permanent Account Number (PAN) plays a vital role in India’s financial system, serving as a unique identifier for individuals and entities involved in financial transactions. PAN helps track financial activities, ensures transparency, and enables efficient tax compliance. By linking various financial transactions like tax payments, income returns, and TDS/TCS credits to a single identifier, PAN simplifies the process of monitoring and managing tax liabilities for both taxpayers and the Income Tax Department. 

The benefits of PAN extend beyond tax compliance, as it acts as a gateway for essential services in the digital economy, promoting financial inclusion and facilitating various economic activities. The PAN 2.0 project, with its focus on modernization, digitalization, and enhanced security, further strengthens the role of PAN in India’s digital transformation, making it an indispensable tool for individuals and businesses navigating the complexities of the financial landscape.