Daily Current Affairs : 27-November-2024
The Indian government’s recent approval of PAN 2.0 marks a significant upgrade in the way the Income Tax Department manages tax-related data. This project, approved by the Cabinet Committee on Economic Affairs, introduces several improvements over the existing PAN system, which has been in place for decades. Here’s an overview of both PAN and its upgraded version, PAN 2.0.
What is PAN?
Origin and Purpose of PAN:
- Introduced in 1972: The Permanent Account Number (PAN) was initially introduced in India in 1972. It was revamped in 1995 to improve tax compliance and prevent tax evasion.
- Issued by the Income Tax Department: PAN is issued by the Income Tax Department under the Central Board of Direct Taxes (CBDT). It is a unique identification number assigned to individuals and entities.
- Purpose: PAN serves as a means to link individuals and entities to their tax-related transactions, ensuring transparency and making it easier for authorities to track and monitor tax payments.
Key Features of PAN 2.0
The transition from PAN to PAN 2.0 brings several improvements, with an aim to modernize the system and improve efficiency. Let’s compare the features of PAN and PAN 2.0.
Comparison Between PAN and PAN 2.0:
| Aspect | PAN | PAN 2.0 |
|---|---|---|
| Introduction Year | 1972 (revamped in 1995) | 2024 (Planned Upgrade) |
| Issuance System | Hosted on multiple platforms | Unified portal for all PAN/TAN services |
| Application Process | Partially online with paper options | Fully online, paperless process |
| QR Code | Basic validation (introduced in 2017) | Enhanced dynamic QR code with real-time data |
| Updates/Corrections | Fee-based updates | Free updates for name, DOB, and address |
| Data Security | No centralized data vault | Mandatory PAN Data Vault for enhanced cybersecurity |
| Business Identifier | For tax-related activities | Unified business identifier for multiple systems |
| Grievance Redressal | Limited, via individual portals | Streamlined grievance system via unified portal |
| Existing PAN Validity | Remains valid | Remains valid but upgrade available for free |
Benefits of PAN 2.0
- Fully Online Process: Unlike the current PAN system, PAN 2.0 will be fully digital, making it easier for taxpayers to apply, update, and access services without relying on paper-based processes.
- Improved Security: With a centralized PAN Data Vault, PAN 2.0 ensures higher levels of cybersecurity, reducing the risks of data breaches and fraud.
- Unified Business Identifier: PAN 2.0 will serve as a unified identifier for businesses, streamlining multiple systems that currently require separate identification numbers.
- Free Updates: Under PAN 2.0, individuals can update details like their name, date of birth, or address without incurring a fee, which was previously charged for such changes.
Important Points:
- PAN Introduction and Purpose:
- Introduced in 1972 and revamped in 1995 to improve tax compliance.
- Issued by the Income Tax Department under the Central Board of Direct Taxes (CBDT).
- Links individuals and entities to tax-related transactions for transparency and monitoring.
- PAN 2.0 Features:
- Fully online and paperless application process (unlike the current partially online system).
- Unified portal for all PAN/TAN services, replacing multiple platforms.
- Enhanced dynamic QR code with real-time data for better validation.
- Free updates for personal details (name, DOB, address), replacing the previous fee-based updates.
- Centralized PAN Data Vault for enhanced cybersecurity.
- Unified business identifier for multiple systems, improving efficiency for businesses.
- Streamlined grievance redressal through a single portal.
- Benefits of PAN 2.0:
- Easier, fully digital process for applying, updating, and accessing services.
- Stronger data security through a mandatory PAN Data Vault.
- No fees for updates on personal details.
- Simplified tax compliance with a unified system for individuals and businesses.
- Existing PAN Validity:
- Current PAN remains valid, but upgrading to PAN 2.0 is free and optional.
Why In News
A day after the Cabinet Committee on Economic Affairs approved PAN 2.0, the Income Tax Department issued a detailed clarification on the project, outlining its key features, benefits, and the transition process to ensure a smooth implementation for taxpayers.
MCQs about PAN 2.0
-
When was the Permanent Account Number (PAN) system initially introduced in India?
A. 1980
B. 1995
C. 1972
D. 2000
-
Which of the following is a major improvement introduced by PAN 2.0 compared to the existing PAN system?
A. Paper-based application process
B. No updates allowed for personal details
C. Fully online and paperless application process
D. Increased tax rates
-
What is the key feature of the new QR code introduced in PAN 2.0?
A. Basic validation
B. A static QR code
C. Dynamic QR code with real-time data
D. No QR code is used
-
Which of the following is NOT a feature of PAN 2.0?
A. Free updates for personal details like name and address
B. A mandatory PAN Data Vault for enhanced cybersecurity
C. A fee for updating personal details
D. Unified portal for all PAN/TAN services
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