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The Curious Case of PAN–Aadhaar Linkage
The Government of India’s justification for removing any distinction between a permanent account number allotted based on the Aadhaar and one allotted based on identification documents other than Aadhaar is examined. The government claims that this measure will end black money and money-laundering. Whether Aadhaar linkage to PAN truly identifies those holding financial instruments and undertaking financial transactions and whether it will save India the embarrassment of incorrect reporting as part of the nation’s Foreign Account Tax Compliance Act and Common Reporting Standard obligations are explored.
The authors are grateful to the reviewer for thorough and meticulous verification and detailed comments that helped us revise sections of the paper for greater clarity.
On 9 July 2015, Shaktikanta Das, the then revenue secretary of India, signed a memorandum of understanding (MoU) with Richard Verma, the then United States (US) ambassador to India, to improve international tax compliance and to implement the Foreign Account Tax Compliance Act (FATCA) (US Department of the Treasury 2015). FATCA is a US federal law enacted in 2010, requiring all non-US foreign financial institutions (FFIs) to search their records for customers with any connection to the US, including indications in records of birth and prior residency in the US, and to report the assets and identities of such persons to the US Department of the Treasury.
India also signed a multilateral agreement on 3 June 2015 to automatically exchange information with more than 100 jurisdictions committed to the Common Reporting Standard (CRS) based on Article 6 of the Convention on Mutual Administrative Assistance in Tax Matters under the CRS (OECD 2018, 2019).1
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