1 Presented by July-2013, IIM Indore

2  The Unique Identification (AADHAAR) is a 12 digit Number, which identifies a resident, will give individuals the means to clearly establish their identity to public and private agencies across the country.  AADHAAR Number is provided during the initiation process called enrolment where a resident’s demographic and biometric information are collected.  Uniqueness of the provided data is established through a process called de-duplication.

3  A process wherein AADHAAR Number, along with other attributes, including biometrics, are submitted to the Central Identities Data Repository (CIDR) for its verification on the basis of information or data or documents available with it.  AADHAAR authentication service only responds with a “yes/no” and no personal identity information is returned as part of the response. In case of ‘no’, the reason for mismatch is returned.

4  Permanent Account Number (PAN) is unique alphanumeric combination issued to all juristic entities identifiable under the Indian Income Tax Act  It is issued by the Indian Income Tax Department under the supervision of the Central Board for Direct Taxes (CBDT) and is almost equivalent to a national identification number.  It also serves as an important ID proof.

5  The PAN is unique, national, and permanent. It is unaffected by a change of address, even between states.  This number is almost mandatory for financial transactions such as opening a bank account, receiving taxable salary or professional fees, sale or purchase of assets above specified limits.  The primary purpose of PAN is to bring a universal identification key factor for all financial transactions and indirectly prevent tax evasion by keeping a track of monetary transactions of high net worth individuals.  PAN number is 10 digit with structure is as “AAAAA9999A”  First five characters are letters, next 4 numerals, last character letter.

6  It is mandatory to quote PAN on return of income, all correspondence with any income tax authority. It is mandatory to quote PAN on challans for any payments due to Income Tax Department.  It is also compulsory to quote PAN in all documents pertaining to the following financial transactions :-  Sale/purchase of immovable property valued > Rs. 5 lacs;  Sale/purchase of vehicles  Opening Bank Account  Bank deposit/Fixed Deposit/Withdrawal valued > Rs. 50,000/-  Sale/purchase of securities> Rs. 1 lacs  As a Proof of Identity (PoI) for availing utility services, etc.

7  Multiple PAN Cards per individuals to evade Tax exemption.  To keep a check on fake, forging or duplicate PAN cards.  Ghost PAN holders for Benami Transactions sales/ Purchase of land/securities  To increase the volume of Income tax returns filing.  There are 120 million PAN holders but only 35 million files the returns to IT Dept.  PAN provides PoI, whereas Aadhaar provided PoI & PoA.

8  Minimize fake, forged and duplicate PAN cards by ensuring single & unique PAN card to an individual in order to track all intended transactions.

9  An individual can hold only one unique Aadhaar number.  Linking PAN with Aadhaar will eliminate the multiple PAN numbers by same individuals.  Ghost/fake/forged Aadhaar number cannot be created, thus eliminating transactions with Ghost/fake/forged PAN Card.

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12 1) Seeding AADHAAR number in to PAN database. 2) Seeding PAN number in to AADHAAR database.  Organic:-During seeding individual shall provide Aadhar number and matching it with the PAN database.  Inorganic:- Retrieving the data from Aadhaar linked database of another agency & matching the overlaps with PAN database. Extract the Aadhaar number of verified individuals and add in to PAN database.

13 PAN Number User Aadhaar Number Authentication Device IT Dept/Registration Dept/Bank etc. Authentication User Agency/ Sub-AUA Authentication Service Agency (AUA) Authentication Service Provider (AuSP) UIDAI Central Identities Data Repository (CIDR)

14  Along with Aadhaar number following details required for authentication-  Type-1: Demographic Attributes  E.g.:- Name, Date of Birth, Address etc.  Type-2: OTP + Demographic  Type-3: Single Factor: Biometric (+Demographic)  E.g.: Fingerprint (+Name)  Type-4: Two Factor: Biometric + OTP (+Demographic)  E.g.:- Fingerprint + OTP (+Name)  Type-5: Three Factor: 2 Biometrics + OTP (+Demographic)  E.g.:- Fingerprint + Iris + OTP (+Name)

15  Broadly there are following instances for verification of PAN- Aadhaar linkage:- 1) First Time issuance of PAN card:- (Type 4 or 5)  PoI & PoA is established through Aadhaar verification.  The possession of duplicate PAN card is verified. 2) Periodical Authentication:- During filing the annual return (Type-3)  Verification from Aadhaar will eliminate multiple returns by an individual. 3) During carrying regular Transactions:- (Type-2)  Tracking of Transactions

16  An individual can not hold multiple PAN cards.  Curbing the menace fake, forging or duplicate PAN cards.  Eliminating Ghost PAN holders  Restricting Benami Transactions sales/ Purchase of land/securities  Increase in volume of Income tax returns filing.  Effective Tracking of Transactions occurring at various locations/organizations.

17  No need to prove individuals identity.  No need to carry PAN card/submit photo copy to avails services/schemes of Government.  Universal PoI & PoA for an individual.  Linkage of multiple interfaces enables seamless integration thus eliminating redundant verification.

18  Political risk :- Support from central/state and local governments is crucial.  Adoption risk:- A critical mass is required for success of this project.  Enrolment risk:- Enough touch points are essential for linking.  Risk of scale:- Administration and storage of records by IT department.  Technology risk:- Linking, seeding, Authentication, de-duplication of PAN numbers and data obsolescence etc.  Privacy and security risk:- Biometric data security is required.  Sustainability risk:-Maintaining the initial momentum over a longer term.

19  Cleaning of PAN Database by seeding with Aadhaar number should be made mandatory.  PAN can be given to child with age less than 5 years, for which biometric data is not maintained in Aadhaar database. Therefore, biometric authentication is a issue.  Inter-operability of PAN database with other organizations such as Banking, Registration Department etc. is a issue.  PAN is issued by IT department, whereas Registration Department comes under state government. Co-ordination between these two department is a issue.

20  The proposed mechanism will fulfill the intended benefits.  Misuse of PAN card is minimized and most of transactions can come under preview of Income Tax Dept.  Pain to citizen is minimized by elimination Burdon of PoI & PoA

21 PPT downloaded from

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