PAN 2.0 Project

GS2 – GOVERNANCE 

PAN 2.0 Project: Key Highlights

Why in the News? The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has approved the PAN 2.0 Project, proposed by the Income Tax Department.

About PAN 2.0 Project:

1. Objective: PAN 2.0 aims to modernize and integrate the existing PAN/TAN 1.0 system by consolidating core and non-core PAN/TAN activities and PAN validation services.
2. Goal: The project is designed to improve taxpayer registration services using advanced technology, ensuring a more seamless and enhanced digital experience.

Key Features of PAN 2.0:

1. Common Business Identifier: The project will combine PAN, TAN (Tax Deduction and Collection Account Number), and TIN (Taxpayer Identification Number) into a unified system, simplifying compliance for businesses.
2. QR Code Integration: All PAN cards, new and existing, will feature an upgraded QR code. First introduced in 2017, the QR code will further integrate financial transactions with the tax department.
3. Unified Portal: A new, paperless online portal will replace the outdated system, improving accessibility, service delivery, and grievance redressal.
4. Mandatory PAN Data Vault: Entities like banks and insurance companies handling PAN data will be required to securely store this information in a mandatory PAN data vault, enhancing data protection and cybersecurity.
5. Technology-Driven Transformation: The PAN 2.0 project will revamp the taxpayer registration process, consolidating PAN/TAN activities and improving validation services to boost efficiency and accessibility.

Benefits for Individuals and Businesses:

• For Individuals: PAN cardholders can upgrade to QR code-enabled PAN cards at no cost, enhancing the integration of financial transactions with the tax department. PAN applications will also be fully online and paperless.
• For Businesses: PAN will serve as a unified system for filing tax challans and returns, simplifying tax documentation and compliance.

Current Identification Numbers and Their Roles:

1. Permanent Account Number (PAN): A 10-digit alphanumeric identifier used by the Income Tax Department to track financial transactions, such as tax payments and returns. PAN remains unchanged once assigned and is essential for filing income tax returns.
2. Tax Deduction and Collection Account Number (TAN): A 10-digit alphanumeric identifier needed for deducting or collecting tax at source. It must be quoted in TDS/TCS returns, payment challans, and certificates.