The Central Board of Direct Tax (CBDT) had earlier asked all taxpayers to link their permanent account number (PAN) with Aadhar by March 31, 2023. But the date was later extended to June 30, 2023. Even the Securities and Exchange Board of India has asked investors to link the two before the month end to continue doing transactions in the securities market.
Jitendra Dhaka Founder of BankSathi said, "Know-your-customer (KYC) requirements will ensure that only authorised users have access to e-wallets, thereby boosting security and decreasing the risk of fraud. By integrating KYC to e-wallets, clients will have improved investment transparency, as they will be able to more easily trace their mutual fund holdings and transactions. After the completion of the KYC procedure, consumers will be able to invest in mutual funds using e-wallets without the burden of continuously providing physical documents."
Who needs to link PAN with Aadhar?
According to the CBDT the Income-tax act makes it mandatory for every person who was allotted a PAN on July 1,2017 to link it to the Aadhar number. But anyone who is 80 years and above or a non-resident as per Income-tax Act and a person who is not a citizen of India do not compulsorily need to link the PAN with Aadhar.
Why did SEBI make it mandatory for investors to link PAN with Aadhar?
Since PAN is the key identification number and it is also a part of the KYC requirements for all transactions in the market, SEBI has asked all registered entities and MIIS to ensure that all the participants have valid KYC.
All investors are required to link the PAN with Aadhar before March 31 for continual and smooth transactions and to avoid the consequence of non-compliance with CBDT circular. If not followed there would be restrictions on securities and other transactions until the PAN and Aadhar are linked.
What are the challenges for the customers?
Talking about the challenges Dhaka said, "It is possible that a large number of people living in Tier 3 and Tier 4 and 5 cities are unfamiliar with the KYC process and struggle to understand the criteria and processes involved in it. And they may not have a sufficient level of literacy in digital media, which makes it difficult to perform KYC through online platforms. Customers that live in more remote areas and do not have access to the internet or cell phones may have a more difficult time completing the Know Your Customer procedure online. As a result, the SEBI and the companies that supply e-wallets have a responsibility to inform users about the advantages of KYC and to simplify the process of completing KYC for customers in Tier 2 and Tier 3 locations. E-wallet service providers should also study other ways for users to complete KYC, such as the installation of kiosks or the formation of partnerships with local agents who can assist customers through the process."
