The government is spending Rs 1435 crore to upgrade the existing permanent account number (PAN) infrastructure to help improve services for taxpayers and corporates. This new project, dubbed PAN 2.0, is set to be launched soon and has already received approval of the Cabinet Committee on Economic Affairs (CCEA).
Union Minister for Information and Broadcasting Ashwini Vaishnaw said at an event yesterday, “PAN cards are very important for the middle class, small business and others. It is decided to completely overhaul the entire digital backbone of the PAN system and highly upgrade it. The software which is now running the existing system has been running for 10 to 15 years and their life is now over. Hence the need for a new information technology system was felt. PAN 2.0 will be complete paperless, online and the complete focus will be on the grievance redressal system of the user.”
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How new PAN 2.0 project may benefit taxpayers
According to a press release by the Ministry of Finance,the PAN 2.0 project enables technology-driven transformation of taxpayer registration services and has significant benefits including:
- Ease of access and speedy service delivery with improved quality;
- Single Source of Truth and data consistency
- Eco-friendly processes and cost optimization; and
- Security and optimization of infrastructure for greater agility.
“PAN 2.0 Project is an e-Governance project for re-engineering the business processes of taxpayer registration services through technology driven transformation of PAN/TAN services for enhanced digital experience of the taxpayers. This will be an upgrade of the current PAN/TAN 1.0 eco-system consolidating the core and non-core PAN/TAN activities as well as PAN validation service. The PAN 2.0 Project resonates with the vision of the Government enshrined in Digital India by enabling the use of PAN as Common Identifier for all digital systems of specified government agencies,” the Ministry of Finance said in the press release.
What appears from the information available so far is that PAN 2.0 is more like an upgrade to the IT system on which PAN architecture was running. The intended goal is to enhance its digital utility in terms of deduplication, cross section verification and seamless authentication. It is unlikely that existing PAN holders will need to apply again as the new system will largely have an impact on the new applicants once upgraded.
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ET Wealth Online asked various experts about the benefits of the new PAN 2.0 project for taxpayers. Here’s what they said:
Mihir Tanna, associate director, S.K Patodia LLP, a CA firm: It is likely to merge registration requirements of different laws (governed by central) like PAN, GST, CIN issued by MCA etc. The government said that Unique numbers (UIN) will be given to all including businessmen and professionals. As of now when a new company is formed, PAN is also issued and there is no requirement of filing PAN application separately. Similarly, under PAN 2.0 we can expect that once a new person/entity applies for registration, a UIN will be issued which can be used for Income tax, GST, MCA compliances. Respective department verification is likely to be continued for new persons/entities like income tax will check if PAN is already issued or not to the same applicant, the GST department will check if the applicant is actually involved in declared goods or services. However, if UIN is going to replace CIN, we need to wait for more clarification from government as currently 2 entities with same name can get PAN (if other details like address, DOI is different) but company applying for registration will not get same name if any other company already exist with similar name.
Also, for all existing holders of PAN, GST, CIN is likely to be converted into new system of PAN 2.0 if they are involved in any business or profession. We can also hope that under PAN 2.0 unique number will be issued in a faster way as everything will be in digital form (unlike PAN application which currently can be filed offline also). To summarise, we can expect that it will be like Aadhaar for all businesses and professionals.
Chartered Accountant Ashish Niraj, partner, ASN & Company: Prima facie it looks like a lot of features of Aadhaar are going to get incorporated in PAN 2.0 project. Moreover, the government has said that PAN 2.0 will have a QR (quick response) code which will be provided at no additional cost to existing users and new users may also be served as a Common Identifier for all digital systems. I believe that this will help give clarity to taxpayers and also help save them time and money.
Chartered Accountant Anand Bathiya, President, Bombay Chartered Accountants’ Society (BCAS): The key aspect of PAN 2.0 project is the upgraded technology framework that will enable PAN to be used as a universal identifier for businesses. PAN will now be the new Business Aadhaar. Today a business entity has many registrations, eg PAN, TAN, TIN, GSTIN, CIN, EPFO number, etc. a combined common identifier powered by technology would add to the ease of running a business in India.
This project has been in the works for sometime. Intention of this effort was expressed by the Finance Minister in 2023 budget. The core intention from the government’s perspective seems to be ability of tuning-in to different datasets with an objective of enhancing effective governance.
The new project is being built grounds-up on an upgraded technology backbone. Over the last decade, India’s digital stack has built immense capabilities and PAN integration will provide a significant boost to this effort. A revamped framework would hence have been thought appropriate.
Deepak Chopra, chairman, direct tax committee, Karnataka State Chartered Accountants Association (KSCAA): The PAN 2.0 project is a welcome step towards leveraging technology to simplify and streamline taxpayer services. Its success, however, will depend on how well the transition is managed, ensuring minimal disruptions to existing systems. Proper testing and user-friendly interfaces will be critical to achieving the intended outcomes. While the allocated Rs 1,435 crore signifies the government’s commitment and confidence in the project’s benefits, taxpayers and professionals alike hope that the implementation is efficient, transparent, and delivers long-term value. We remain optimistic that it will deliver on its promise of improved service delivery and efficiency.
Sudhir Kaushik, Co-founder & CEO, Taxspanner: PAN 2.0 The initiative will integrate core and non-core PAN/TAN services into a unified, paperless platform, aligning with the government’s digital India. The existing PAN cards are valid, and taxpayers have an option to get upgraded PAN card with QR code without any additional code.This initiative will further strengthen the tax department net to catch tax evaders as PAN is unified identifier for all financial transactions.
