PAN cards have huge potential for fraud: Here's how govt could prevent misuse

The government has announced that it is working on ways to make the PAN card tamper proof. PAN is an acronym for Permanent account number that each potential taxpayer must have to carry out big ticket purchases (of over Rs 20,000), big deposits, or even filing income tax returns with the government.

The idea is good. Anything that is tamper-proof is welcome. But somehow the government has got its priorities all mixed up – at least where PAN cards are concerned.

PAN card. Image courtesy :CNN-IBN

PAN card. Image courtesy :CNN-News18

The need of the hour is the systems that are both user friendly and that can deter fraud.

Can PAN cards promote fraud? Of course. Let’s assume that I go to a jeweller’s shop and purchase jewellery worth over Rs 5 lakh. The law requires me to give my PAN number to the jeweller.

But if I give my friend’s PAN card to the jeweller and the jeweller uses his PAN details against sale of jewellery, then the consequences can be horrendous.

Two years after the purchase is done, the income tax authorities could go knocking at my friend’s house and ask him the source of money for the purchase of jewellery. My friend may protest innocence. But he will be sent through the wringer by the tax authorities who will possibly suspect him of concealing income. He will then have to spend on lawyers and tax consultants to prove himself innocent.

All this can be avoided. All that the government has to do is to make all PAN cards a swipe card – with a magnetic strip at the back. No PAN card authorisation can be done unless the card is swiped. If there is no POS (point of sale) terminal, the PAN details must be entered on the government’s website within 24 hours.

Just as is currently being done with credit and debit cards, each transaction sends out an SMS and an email alert to the PAN card holder. If the card holder finds that someone has misused his PAN card, he should be given an address to which he should immediately email his protest.

All that the government needs to do is to give the PAN card holder an acknowledgement that his protest has been registered. This acknowledgement then becomes the innocent citizen’s proof of innocence which can then thwart the invasive and aggressive moves of the income tax authorities.

In fact, the government should go a step further. Such emails of protest should immediately be forwarded to the local police station which can then query the jeweller and use his CCTV images to find out who the customer was so that he can be apprehended for using a wrong PAN card.

By leaving this loophole, where people can use someone else’s PAN card details, the government has actually allowed corruption to flourish. It has allowed unscrupulous persons to give false PAN details and thus escape the taxman’s scrutiny.

What India needs is proper systems to prevent fraud. It does not need a new tamper proof PAN card. The first is a priority. The second is desirable.

The government must learn to focus on priorities first, and deal with the desirables later.

Published Date: Jan 18, 2017 14:02 PM | Updated Date: Jan 18, 2017 14:02 PM

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