Budget 2023: PAN may get legal backing as single business identification

Budget 2023: The Union Finance Ministry may bring in a legal framework for adopting the permanent account number (PAN) card as the single business or corporate identification proof in Budget 2023-24 proposals. According to a report in the Business Standard, this move would first help all businesses in securing approvals. Secondly, through the provision, businesses or entities can link their PAN card with any other existing identifications. This would help them in simplifying the procedures and will be recognised under various central and state legislations.

As per the report, the enabling provision or clause may be introduced in the Finance Act, 2023, ensuring the legal backing for PAN is used as the primary identifier of an entity.

 At present, there are at least 20 different windows at both the central and state levels, which need to be looked into for getting clearances and approvals for businesses and projects. These include the Employees’ Provident Fund Organisation (EPFO), Goods and Services Tax Identification Number (GSTIN), Corporate Identification Number (CIN), Taxpayer Identification Number (TIN), Tax Deduction Account Number (TDAN), and others.

The proposal is in line with the recommendation of the working group, headed by an additional secretary (revenue) under the Ministry of Finance. The group submitted its report end-December, which proposed that the move should be carried out in a phased manner, starting with central departments, such as GSTIN, and then moving toward the state departments. One by one the departments can adopt PAN as the sole identity for all kinds of clearances, registration, licences, etc, for ease of doing business. The committee has proposed that the departments would be given a year to adapt to the new system.

“Each state and central government body may be asked to update its system to ensure PAN is used as a common identification (ID) to access its services,” said the finance ministry official quoted by Business Standard.

The single identifier for businesses proposal was first floated at a meeting of the committee of secretaries in October 2020, which was later forwarded to an interministerial committee meeting headed by the finance secretary in July 2021. The matter was later discussed with various departments, including the Department for Promotion of Industry and Internal Trade, about its feasibility and reach.

“The in-depth analysis of having one of the existing IDs as a single identifier or creating a whole new unique ID led to a consensus that PAN be adopted, and accordingly a working group formed in September 2022 to give the idea an operational push,” the finance official said.

Advantages of single window framework:

Ø The new framework will help the ease of doing business by reducing the burden of compliance, streamline the process of starting a business, and even help the government enhance data-sharing and interoperability among agencies and departments.

Ø The PAN card was chosen as a base identifier, as it has one of the widest comprehensive coverage, wide acceptability, and is relevant to all business entities.

Ø Besides, it will be the least disruptive in terms of existing process flow at various departments and agencies, it highlighted.

Ø The new framework of single identity can lead to a single KYC for availing of multiple services in one place.

Ø Besides, the mapping, and linkages with PAN cards will ensure coherence in the KYC requirement among different government bodies.

Ø The working group has also suggested making a PAN-based login instead of a single sign-in using an email ID, the Business Standard report stated.

“The system has already created the infrastructure for mapping various IDs of a business. It will further help government bodies to provide a single-point interaction for the businesses,” the official said.