More transparency and enhanced accountability
The Government's decision to make Aadhaar, a unique identification number issued by the Unique Identification Authority of India, compulsory for the filing of income tax returns and also for the procurement of Permanent Account Number (PAN) card, is a pragmatic decision and must be viewed as a reform aimed to bring more transparency into the system of tax collection in the country. Additionally, the linking of Aadhaar will not only make tax evaders accountable, but will also help curb black money. This move was all the more desirable to bring the people back to the tax net. As it is, there had been unscrupulous people who had devised ways and means to evade tax payment. On the one hand there was one lot of people that had been holding not just one but five PAN cards, which made the detection of evasion difficult. On the other, there were others, who were so far-sighted that they sent their money to offshore countries. While for the tax evaders, particularly the elite, tax evasion remained a lucrative business, it was the Government which had to bear the brunt. Simply put, tax evasion or tax fraud refers to a situation where the sum of money that the Government out to have received from the citizens as income tax, in lieu of the services offered, does not reach the Government as desired. This in turn costs the economy severely as it undermines the potential of the Government to fulfill basic fundamental rights such as right to education, housing and a decent standard of living. Moreover, it makes no sense that we have multiple identity cards like a PAN card, an ID card etc. Aadhaar now has a pan-India presence. Hence, the Finance Minister made sense when he said that Aadhaar may become the only card in future.
In fact, the problem of tax evasion is a global one and every country has some form of national identification process. For example, the US has a social security number. However, in the case of India, there are three initial concerns. First, is the privacy issue. As the Finance Minister said, Aadhaar is now poised to take the centre-stage for all identification purposes in the future; it is all the more crucial for the Government to address privacy concerns. Second, in case of a breach, there has to be an adequate mechanism to ensure quick justice. As it is our judiciary is so over burdened that it is least expected that the misuse of identity cards will be given any priority. Third, in all possibility, tax evaders will soon find some jugaad to continue evading tax. The Government, therefore, has to make sure that it has a strong digital network and technology to prevent the manufacture of duplicate accounts by strengthening the process for issuance of PAN card itself. The linking of Aadhaar to various Government services and social security programmes has led the exchequer save crores of money. Hopefully, with this move, the taxman will save big and have a wealth of information about the tax evader.