What is PAN 2.0? How does it differ from the old one?

Union Minister Ashwini Vaishnaw announced on Monday that the government was all set to introduce PAN 2.0.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has approved the Income Tax Department’s PAN 2.0 Project.

The project will make the permanent account number a “common business identifier” for all government agencies’ digital systems.

The move is in line with the central government’s flagship programme, Digital India.

Here’s all we know about the new development.

What is the PAN 2.0 Project?

Permanent Account Number (PAN), introduced in 1972 under Section 139A of the Income Tax Act, serves as a unique taxpayer identification number.

The PAN 2.0 Project represents a tech-driven upgrade to this decades-old PAN/TAN services system.

It is an e-governance initiative for re-engineering the business processes of taxpayer registration services.

More from Explainers

How ChatGPT is becoming everyone’s BFF and why that’s dangerous This Week in Explainers: How recovering from Gen-Z protests is a Himalayan task for Nepal

The government will spend Rs 1,435 crore on the project that is aimed at enhancing taxpayer registration services.

The revamped PAN will come with a QR code feature, enabling quick scans and full online functionality. This is a significant step towards an economic system that is entirely digital, secure, and effective.

#WATCH | Delhi | Union Minister Ashwini Vaishnaw says, "PAN card is part of our life which is important for the middle class and small business - it has been highly upgraded and PAN 2.0 has bee approved today. The existing system will be upgraded and the digital backbone will be… pic.twitter.com/E2gjhnHYgz

— ANI (@ANI) November 25, 2024

Also read:  12 money rules changing from October 1 in India

How will this benefit taxpayers?

The PAN 2.0 Project aims to enhance the taxpayers’ digital experience through ease of access, faster services and improved quality.

The new PAN will function as a universal identifier for business-related engagements across specified domains.

Aligned with the government’s Digital India initiative, the project adapts an eco-friendly approach by using paperless systems and cost-optimised infrastructure.

It also offers enhanced security with upgraded digital infrastructure for better agility and protection.

The PAN 2.0 initiative approved by the Union Cabinet today anchors our taxpayer registration system with state-of-the-art technology to make filing of IT returns a hassle-free experience. It will enthuse more taxpayers to join the journey of building a great nation initiated by… pic.twitter.com/PZWD98ATXt

— Amit Shah (@AmitShah) November 25, 2024

The project would consolidate core and non-core PAN/TAN activities into a unified ecosystem, enhancing validation services and making processes more robust.

“The existing system will be upgraded and the digital backbone will be brought in a new way… We will try to make it a common business identifier. There will be a unified portal, it will be completely paperless and online. The emphasis will be on the grievances redressal system,” Vaishnaw said during a Cabinet briefing on Monday.

He added, “The grievance redressal system is being updated. For the protection of data, a PAN data Vault System is being set up. With a unified portal, there will be no need to go to other portals.”

Also read:  State of income tax in India: Rich pay more, middle class less

Do you need to apply for a new PAN card?

No.

The Cabinet ensures that a citizen’s existing PAN remains valid, despite the significant digital transformation.

About 78 crore (98 per cent) of PANs have already been issued since 1972. This upgrade promises a better digital experience without asking existing PAN holders to do anything.

While the Centre has not announced a specific timeline for the rollout, Vaishnaw asserted that PAN upgrades will be provided to individuals at no cost.

To further transform digital services and strengthen the Digital India mission, the Modi government has also approved two significant decisions:

🖥️ PAN 2.0 Project of the Income Tax Department: Driven by technological innovation, this e-governance project aims to upgrade… pic.twitter.com/oJNFjFdQw7

— Piyush Goyal (@PiyushGoyal) November 25, 2024

Also read:  Will income tax rate for middle class be reduced? Nirmala Sitharaman answers

Why PAN is essential?

A PAN card is used to track an individual’s transactions, including activities like tax payments, TDS/TCS credits, income returns, and particular transactions, among others.

It makes linking numerous documents and actions, such as tax payments, assessments, demands, and arrears, quite easier.

PAN also facilitates rapid finding of data and assists in comparing information obtained from multiple internal and external sources on loans, investments, and business operations.

While broadening the tax base generally, this system helps detect tax evasion.

With inputs from agencies