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Govt plans to link GST with PAN

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The Centre is planning to integrate the direct and indirect taxation systems for all indirect taxpayers by linking the GST number with the permanent account number (PAN) issued by the income tax department, reports SHRIMI CHOUDHARY

With the advent of goods and services tax (GST), the Centre is now planning to integrate the direct and indirect taxation systems for all indirect taxpayers by linking the GST number with the permanent account number (PAN) issued by the income tax (I-T) department.

The move aims at curbing tax malpractices, as cross-checking I-T payments with GST payments is expected to prevent tax evasion.The move would also bring the GST-PAN
linked system in line with the prevailing PAN-based system for I-T facilitating data exchange and taxpayer compliance.

A PAN-linked system will provide correlation between the payment of direct and indirect taxes and also within the tax authorities administering them, said a senior tax official. Explaining the advantage of having a PAN-linked number, the senior tax official said PAN had an all-India presence. It has the single-largest base of 240 million against 6.56 million registrations, which have been so far made on the GST Network.

Tax experts say that the move will equip tax authorities to ensure taxpayer compliance. “The Centre should be expected to eventually create a relevant management information system to ascertain the total sales reported under GST and seek reconciliation with information available with the I-T department,” said Uday Pimprikar, tax partner, EY India. The revenue department had earlier examined a proposal to use Aadhaar for the purpose, but it was dropped since Aadhaar would be issued only to citizens while the business identification number would be for all legal entities, including individuals, companies and partnership firms.

The tax department has already received several concerns about the migration and implementation of GST. “The industry has concerns on the limited number of GST service providers presently approved and the reliability of the linkage between the firms and application service providers. Some concerns will also be on the ability of micro and small retailers to be able to submit online returns,” said Suvodeep Rakshit, senior economist, Kotak Institutional Equities.

Although the industry has largely welcomed the move, experts say there would be short-term disruption. It would take time for the entities to adjust to the new framework of input tax credit. The move aims at curbing tax malpractices, as crosschecking I-T payments with GST payments is expected to prevent tax evasion

Business Standard New Delhi, 30th June 2017

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