Recently when the Union Budget was unveiled, the government said that from this year onwards in India people will be able to use Aadhaar to file their income tax returns. While the government said that it was making Aadhaar and PAN (permanent account number) interchangeable, in practice it effectively killed PAN. Now, there is a report noting that all PAN cards that have not been linked to Aadhaar will be deactivated after August 31.

In report Business Standard notes that "to validate and continue using the existing PAN cards, citizens will have to link them to Aadhaar". Or else, these PAN cards will be deactivated and people will have to quote Aadhaar number while filing their taxes. The govt sources told the business daily that once someone, who doesn't have Aadhaar linked with his or her PAN card or doesn't have a PAN card, quotes Aadhaar while filing tax, a new virtual PAN number will be generated for that person. This number will be linked to the quoted Aadhaar number.

Currently there are around 400 million PAN cards in India, and only around 220 million of these are linked with Aadhaar. This exercise of linking Aadhaar with PAN cards started a few years ago but the government has often faced criticism over the move, with people raising privacy concerns related to linking of two numbers. The move has also faced challenge in the court, however, Supreme Court in Aadhaar verdict earlier this year allowed linking of PAN Card and Aadhaar, but also said that Aadhaar cannot be made mandatory for availing basic services.

Recently, the government passed Aadhaar Amendment Bill 2019 in Lok Sabha and Rajya Sabha, hinting that despite the Supreme Court order use of Aadhaar by private companies like banks and telecoms will be allowed.

As far as linking of PAN and Aadhaar is concerned, here is how it how it works now:

-- Everyone has to link their PAN number with Aadhaar number.

-- If you don't have Aadhaar number you have to get one.

-- PAN cards not linked with Aadhaar will be disabled after August 31. Here is what a govt source told the Business Standard: "We are going to provide the flexibility to use either. But, PAN cards that are not so far linked to Aadhaar will be first put in suspension. Citizens can activate them by linking them to Aadhaar."

-- People who don't have a PAN card, don't need to get one anymore. They can use Aadhaar number while filing taxes.

-- When you use the Aadhaar number to file tax, the Income Tax Department will generate a virtual PAN number linked to your Aadhaar number. This will be your PAN in future.

Why is government doing this? Revenue Secretary A B Pandey recently told Business Standard: "If you have not linked PAN card with Aadhaar even after repeated extensions, the question is whether those PAN cards are even genuine in the first place. Therefore, we will block or invalidate those till the time they are linked with Aadhaar."

In other words. government believes if you have not yet linked PAN card with Aadhaar, then your PAN card must be fake.