After Aadhaar was introduced, it became mandatory to link PAN and Aadhaar for this. (Representational)

Highlights "More than 120 crore Indians now have Aadhaar card": Finance Minister

New rule will benefit new tax payers who have Aadhaar but not PAN

PAN has so far been mandatory for filing Income Tax Returns

Union minister Nirmala Sitharaman today said Aadhaar and PAN or Permanent Account Number will be "interchangeable" when it comes to filing Income Tax returns. The new rule is expected to benefit entry-level tax payers who have Aadhaar but not PAN.

"More than 120 crore Indians now have Aadhaar card, therefore for ease of tax-payers, I propose to make PAN card and Aadhaar card interchangeable and allow those who don't have PAN to file returns by simply quoting Aadhaar number. They would be able to use that wherever one is required to use PAN," the minister said today while presenting the Union budget in parliament.

PAN or Permanent Account Number has so far been mandatory for filing Income Tax Returns. After Aadhaar was introduced, it became mandatory to link PAN and Aadhaar for this purpose.

Even the Supreme Court, which ruled that Aadhaar could not be made mandatory for several purposes, said it has to be linked to PAN for filing of tax returns.

Tax experts said the move could be a step towards the use of Aadhaar - in absence of PAN, tax returns can be filed with the 12-digit Unique Identification number.

The Congress took a dig at the BJP over the move. Former union minister P Chidambaram said, "Aadhaar and PAN both are equally efficient. So why did you (the BJP) make such a song and dance about linking PAN and Aadhaar. I don't understand".

In September last year, following petitions challenging the validity of Aadhaar, the Supreme Court cleared the use of the Unique Identification Number for access to welfare schemes. But it struck down attempts to make Aadhaar mandatory for bank accounts, mobile phone connections and school admissions.

A bench headed by then Chief Justice Dipak Misra held that Aadhaar would be voluntary, with an option to exit. "We are of the view that there are sufficient safeguard to protect data collected under Aadhaar scheme," the court said, but added that for the the exclusion of a "minimal" three per cent, 97 per cent cannot be denied the benefits of Aadhaar.

Aadhaar, the top court said, empowers those on the margins of society, which far outweighs its flaws.