PAN will be auto-generated if a taxpayer uses Aadhaar for filing returns: CBDT

New Delhi: The Income Tax Department will automatically issue PAN to a taxpayer using Aadhaar number for filing returns as part of a new arrangement to link the two databases.

According to a notification issued by the CBDT on August 30, a person who furnishes Aadhaar, as they do not have PAN, "shall be deemed" to have applied for allotment of PAN and they will not be required to apply or submit any more documents.

The rule has come into effect from September 1, it said.

The notification said the tax department would "obtain demographic information of an individual from the Unique Identification Authority of India (UIDAI)" for allotment of Permanent Account Number (PAN), a ten-digit alphanumeric identifier issued by it.

The Central Board of Direct Taxes (CBDT) frames policy for the tax department.

CBDT chairman P C Mody had said in an interview in July that the department would "suo motu" allot a fresh PAN to a person who files I-T Returns (ITR) with only Aadhaar as part of a new arrangement to link the two databases.

"In cases where Aadhaar is being quoted, and PAN is not there, we could think on the terms of allotting a PAN to the person (who is filing an income tax return)."

"The law provides that the assessing officer can suo motu allot PAN. So, if Aadhaar is being quoted without PAN, I give him the PAN. It becomes linked," the CBDT chairman had said.

Mody was asked if the Income Tax Department-issued PAN will be dead after Finance Minister Nirmala Sitharaman in her Budget speech on July 5 announced that PAN and Aadhaar are being made interchangeable as the government will allow those who do not have PAN to file I-T returns by merely quoting their Aadhaar number and use it wherever they are required to quote PAN.

Linking of the two databases is now compulsory and backed by law, the CBDT chief had said.