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CAG: Huge gap between PAN card holders and tax returns

Special Correspondent


‘Weed out fake PANs, enhance assessee base, update position in respect of deceased assessees'

Out of 958 lakh PAN cards issued up to March 2010, only 340.9 lakh I-T returns filed last fiscal


NEW DELHI: The Comptroller and Auditor General of India (CAG) has asked the Income Tax Department to monitor the issuance of Permanent Account Number (PAN) cards to ensure that an individual taxpayer does not end up getting multiple cards.

In its report (2010-11) on ‘Direct Taxes' tabled in Parliament on Friday, the CAG pointed to the glaring mismatch between the number of PAN card holders and the number of individual assessees filing income tax returns. The government auditor has revealed that while a total of 958 lakh PAN cards were issued up to March 2010, the number of I-T returns filed last fiscal added up to a mere 340.9 lakh.

Tax compliance

A PAN card allotted to an individual taxpayer is the unique identification number that helps the tax authorities in tracking tax compliance.

Noting the huge gap of 617.1 lakh between the number of PAN card holders and the number of tax returns filed, the CAG suggested that the Central Board of Direct Taxes (CBDT) should identify the reasons for such a massive difference and utilise the information to enhance I-T assessee base.

“The [I-T] Department needs to put in place appropriate controls to weed out the duplicate PAN cards and also update the position in respect of deceased assessees,” the report said, while pointing out that the huge gap could be owing to issuance of multiple cards or demise of such card holders.

Glaring mismatch

Significantly, while the number of PAN card holders went up by 117.7 per cent during the 2005-06 to 2009-10, the number of I-T returns filed in the same period has increased by a mere 14.4 per cent.

“It is should be the constant endeavour of the Department to ensure that the entire assessee base, once correctly identified, is duly meeting the entire tax liability,” the CAG said.

5 regulators kept

surplus funds

Alongside, the CAG also pulled up five regulators for keeping surplus funds worth over Rs. 2,142 crore that had been collected by way of fee and penalty, outside the government accounts in “contravention of Constitutional provision.”

In this regard, the five regulators that have come under the CAG lens are the Securities and Exchange Board of India , the Insurance Regulatory and Development Authority , the Pension Fund Regulatory Development Authority , the Central Electricity Regulatory Commission and the Petroleum and Natural Gas Regulatory Board .

“Scrutiny of the annual accounts of the five regulatory bodies revealed that these bodies were retaining their surplus funds generated through fee charges, unspent grants received from government, aggregating to Rs. 2,142.47 crore at the end of March, 2010 outside the government Accounts,” the CAG said.

This practice by the regulators, the CAG said, was in contravention of the instructions issued by the Finance Ministry that all Ministries and Departments of the government would ensure that funds of regulatory bodies were maintained in the Public Account. “The Finance Accounts of the Union government therefore do not present a current and complete picture of government finances to the extent of funds of Rs. 2,142.47 crore lying outside the government accounts,” it said.

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