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2 June 2020
Instant e-PAN and Facelift of Form 26AS

Recently CBDT announced the launch of instant PAN facility through Aadhaar based e-KYC and substantially changed the contents of Form 26AS. Regarding PAN, a press release dated 28 May 2020 was issued, whereas notification No. 30/2020 of even date was issued amending Form 26AS.
 
Key highlights of the new PAN facility and new Form 26AS are as under

Instant PAN through Aadhaar based e-KYC
  • The Finance Minister in her 2020 Budget speech indicated about allotment of instant PAN based on Aadhaar;
  • The ‘Beta version’ of the facility on a trial basis was started on 12 Feb 2020 on the e-filing website of the Income Tax Department (https://www.incometaxindiaefiling.gov.in/). Under the trial phase, the turnaround time of approximately 10 minutes was clocked;
  • The facility uses the information furnished at the time of Aadhaar application to allot PAN; 
  • Presently, the facility is available only for Indian Citizens (i.e., not for foreign citizens) having valid Aadhaar number;
  • Pre-requisites for applying instant PAN:
    • The applicant should have a valid Aadhaar which is not linked to any other PAN;
    • The applicant should have his mobile number registered with Aadhaar;
    • No documents are required to be uploaded, the entire process is paperless;
    • The applicant should not have another PAN. The possession of more than one PAN will result in a penalty under section 272B(1) of the Income-tax Act, 1961 (Act).
  • After furnishing Aadhaar number and a self-declaration to the above pre-requisites, an OTP is generated on the mobile number registered with Aadhaar authorities;
  • Thereafter, e-PAN is issued, which may be received over email-id registered with Aadhaar authorities. In case an email-id is not registered, e-PAN may be downloaded from the above portal;
  • The entire process and the facility is free of cost as the PAN is issued electronically unless one intends to have a printed PAN Card for which statutory fee of INR 50 (for dispatch within India) and INR 959 (for dispatch outside India) is payable.
Notification of new Form 26AS​​
  • Finance Act 2020 provided for the omission of section 203AA of the Act and introduction of section 285BA in the Act with effect from 1 June 2020, thereby laying the foundation stone for an ‘Annual Information Statement’;
  • With notification dated 28 May 2020, the CBDT brought such Annual Information Statement within the ambit of Form 26AS thereby introducing some new elements in Form 26AS;
  • This has been effectuated via omission of Rule 31AB (for Old Form 26AS) and the introduction of new Rule 114-I under Income Tax Rules 1962 (Rules).
  • A brief comparison of old Form 26AS and new Form 26AS is given hereunder: 
 
Particulars Old Form 26AS New Form 26AS
Applicability Up to 31 May 2020 w.e.f. 1 June 2020
Applicable Rule Rule 31AB Rule 114-I
Title Annual Tax Statement Annual Information Statement
Aadhaar Number -
Information relating to tax deducted or collected at source
Information relating to the payment of taxes
Information relating to demand and refund
Information relating to pending proceedings
 
-
Information relating to completed proceedings
 
-
Information relating to any specified financial transaction(SFT)*
 
-
Information received from any officer under any law in force
 
-
Information received under any agreement referred to in Section 90 or 90A of the Act
 
-
Any other information in relation to sub-rule (2) of rule 114-I of the Rules -
Details forming part of Old Form 26AS despite no specific mention in Rule 31AB:
Information relating to AIR Transaction (other than SFT)
(should be disclosed)
Information relating to details of taxes deducted by the taxpayer on the sale of immovable property
(should be disclosed)
Information relating to TDS defaults
(should be disclosed)

Below  *Specified Financial Transactions reported by the following persons would now be disclosed in Form 26AS of the taxpayers:

 
SFT Transaction to be reported Reportable person
SFT- 001 to 006 Banking related compliances (i.e.
  • current account cash deposits/cash withdrawal of INR 50 lakh in a FY;
  • cash deposits/cash withdrawal of INR 10 lakh in an account other than current account/time deposits during a FY;
  • purchase of bank draft/prepaid instruments/ time deposits of INR 10 lakh in a FY;
  • payment of credit bill amounting to INR 10 lakh in a FY, etc.)
A banking company or company issuing the credit card or Post office or NBFCs
SFT- 007 to 008 Issuance of shares, debentures or bonds of INR 10 lakh or more A company issuing bonds, debentures, and shares during the year
SFT- 009 Buyback shares amounting to INR 10 lakh Only Listed company can Buyback its own shares 
SFT- 010 Issuance of mutual fund units exceeds INR 10 lakh Trustee of mutual fund
SFT- 011 Sale of foreign currency exceeds INR 10 lakh Foreign currency dealer
SFT- 012 Purchase or sale of the immovable property exceeds INR 30 lakh Registrar
SFT- 013 Receipt of cash payment for goods and services exceeds INR 2 lakh Any person who is liable for audit under Section 44AB of the Act
SFT- 014 Cash deposits during the specified period Banking company or post office
 
  • DG systems or any other officer is required to upload the above information on the registered account of a taxpayer within three months from the end of the month in which the information is received by him.
Our Comments

Launching the facility for instant PAN through Aadhaar based e-KYC is a step further towards the digitalization of tax services under the ‘Digital India’ campaign. It also aids CBDT in the expansion of the tax base.

Form 26AS is a useful tool both for the taxpayers and the tax officers. With the expansion of the scope of Form 26AS, it becomes a ‘go-to tool’ for both the taxpayers and the tax officers, thereby reducing the processing time for the preparation of tax returns and conducting audits as well. Among other things, new form 26AS brings transparency, and it is expected that it may also aid the financial institutions in loan processing/extending credit facilities.


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