PAN 2.0 sounds good but will it end fraud through impersonation?

The Cabinet Committee on Economic Affairs earlier this week approved a plan of India’s Income Tax Department to roll out its PAN 2.0 project. This aims to streamline all services related to our Permanent Account Numbers (PANs) and simplify website access for individuals and companies.

One big step under the plan is to unify the three different platforms currently in use into one.

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This will offer easy access to these services for holders of these 10-digit unique alphanumeric numbers. Right now, applicants for a new PAN number need to apply on the UTIITSL portal, but for other tax-related matters, like finding out who one’s tax assessing officer is, one needs to visit the e-filing portal.

Then there is also the Protean e-Gov portal for PAN-related matters, which seems to duplicate some of the services available on other platforms. For most services in general and private ones in particular, choice is good.

But not for taxation, going wrong on which could have such serious consequences that there should never be any scope for confusion. Yet, taxpayers face a befuddling variety of interfaces even for simple services, with little clarity over which one is for what.

The PAN 2.0 project, therefore, is a welcome initiative. Once its unified platform is in place, it will serve as a one-stop shop for all PAN-related matters, which would address many of our troubles.

That said, since such back-end overhauls are infrequent, the department should not just design it in a way that would let it adapt smoothly to future needs, but also close all loopholes that allow the misuse of PAN cards for fraud. Cases have come to light where card-holders have found themselves in a soup after fraudsters cited their PAN numbers to avail of loans, get credit cards issued, etc, in their name.

Of course, protocols do exist to guard against this. Yet, ID checks are not foolproof and PAN details are hard to keep confidential, with the unfortunate result that these cards remain vulnerable to being used for impersonation. Several private services that are weakly regulated, such as furniture rental apps, routinely collect the PAN details of their customers.

Despite claims of cyber-security, these databases are prone to leaks and breaches. It’s unclear if linking PAN cards with Aadhaar IDs, which eases the use of one-time-passwords sent to people’s phones for instant verification, has helped reduce our exposure to fraud risks.

Perhaps the volumes involved magnify the challenge of ensuring 100% authenticity. At last count, India had issued about 780 million PAN cards—mostly held by individuals—and almost 1.4 billion Aadhaar numbers.

Everyone doesn’t need a PAN card, but the numbers are set to increase as Indian incomes rise and folks who have both cards should not have to worry about identity theft and a credit-score downgrade on account of mysterious loans left unpaid.

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Some years ago, the government began issuing PAN cards with QR codes that could be scanned for swift access to other digitally logged details of the holder. With PAN 2.0, tax authorities plan to double down on that effort.

As far as their optics go, these cards look high-tech, like our Aadhaar cards, which not only have QR codes but are linked to back-end databases that embed biometric details. On paper, we have had the technology in place for a fully-secure apparatus for many years now.

It is about time that all digital enablers came together to create a system that doesn’t just offer ease of use, but also addresses unease over misuse.

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