The Central Board of Direct Taxes is considering making PAN mandatory as a requirement for allotting Tax Deduction Account Numbers (TAN) to companies that deduct tax at source, according to a report by the Comptroller and Auditor General (CAG).
The Department is considering tightening the KYC norms for TAN issuance in light of the CAG’s discovery that the procedure for allotting TAN does not require any documents as proof of identity or address, not even a PAN. More than one lakh notices amounting to a total demand of ₹4,180 crore were not addressed due to inadequate information about the assessee.
“For issue of TAN, application is made in Form 49B and submitted to TIN-FC. However, no documents as proof of identity and address are required to be attached while submitting the Form 49B,” the CAG said in its report released on Friday.
“Even PAN field prescribed in the Form 49B is not required to be filled in mandatorily.”
“Audit noticed that, during FYs 2012-13 to 2014-15, 1.08 lakh crore notices were issued by AO under different CIT charges to non-filers/stop filers out of which 5,068 notices were received back as ‘un-served’ on account of inadequacies in ‘KYC’ details,” the report added.
This inability to deliver the notices to the correct addresses resulted in the tax department being unable to recover a demand of ₹4,180 crore raised in the period 2007-08 to 2011-12.
The CBDT had in December 2016 agreed to consider making PAN mandatory for the issuance of TAN, according to the CAG report.
