Context: The Cabinet Committee on Economic Affairs (CCEA) has approved for the PAN 2.0 Project of the Income Tax Department. The PAN 2.0 Project will cost Rs 1435 crore.
Relevance of the topic: Prelims- Key facts about PAN 2.0.
About PAN 2.0 project
- Aim: To modernise the existing PAN system, introducing new features such as a QR code and transforming PAN into a common identifier for businesses and digital systems.
- Key Features:
- It is an upgrade from the current PAN/TAN 1.0 ecosystem to incorporate core and non-core PAN/TAN activities under a unified, paperless, online system.
- A QR code will be integrated in all new and old PAN cards. Existing PAN card holders can upgrade their PAN cards free of cost.
- PAN will be made as a common business identifier for all digital systems of specified government agencies and businesses. All PAN/ TAN/ TIN will be clubbed under this system.
- PAN 2.0 project aims to set up a unified portal along with a “mandatory PAN data vault system” for all entities using PAN data. This is being done for data protection and cybersecurity purposes.
- The entities such as banks, insurance companies etc. who take details of PAN will have to keep PAN data safely, mandatorily through the data vault system.
Benefits of PAN 2.0:
- Ease of access and speedy service delivery with improved quality
- Single Source of Truth and data consistency
- Eco-friendly processes and cost optimisation; and
- Security and optimisation of infrastructure for greater agility.
Significance:
- For businesses, PAN 2.0 would offer a seamless, common system for filing various tax challans and returns.
Existing identification numbers:
1. Permanent Account Number:
- Permanent Account Number (PAN) is a 10-digit alphanumeric number that enables the Income Tax Department to link all transactions of a person with the department. These transactions include tax payments, Tax Deducted at Source (TDS) / Tax Collected at Source (TCS) credits, returns of income, specified transactions.
- PAN acts as an identifier for the person with the tax department. Once PAN is allotted, it remains the same forever. It is mandatory to quote PAN on filing of income tax return.
2. Tax Deduction and Collection Account Number:
- Tax Deduction and Collection Account Number (TAN) is a 10-digit alphanumeric number issued by the Income Tax Department.
- TAN needs to be obtained by all persons responsible for deducting or collecting tax at source. It is compulsory to quote TAN in TDS/TCS return, any TDS/TCS payment challan, TDS/TCS certificates.