Union Budget: PAN Card to become universal identifier for businesses
What's the story
Union Finance Minister Nirmala Sitharaman, on Wednesday, proposed to use PAN (Permanent Account Number) card as the common identifier for digital transactions.
Sitharaman announced the decision while presenting the current central government's last full budget.
PAN is a 10-digit unique alphanumeric number issued by the Income Tax Department. It helps the department keep track of every transaction linked to the PAN holder.
Context
Why does this story matter?
In 2022, India was ranked 63rd in the world for ease of doing business. The country has shown consistent improvement in this regard.
The government wants India to enter the top 50. The Union Budget has a number of announcements to make that happen.
Per the Economic Survey, various administrations across the country have reduced over 39,000 compliances to foster ease of doing business.
Benefit
There are multiple identifiers at the moment
"For the business establishments required to have a permanent account number, the PAN will be used as a common identifier for all digital systems of specified government agencies," Sitharaman said during her budget speech.
By making PAN the common identifier, the government expects to reduce the compliance burden on businesses.
At the moment, there are multiple identifiers used at the central and state levels.
Current system
Investors won't need to fill in multiple identification details
There are several IDs for businesses at present, including EPFO, ESIC, GSTIN, TIN, and PAN. These IDs are used in the process of applying for various government approvals.
Making PAN the common identifier will make it easy for investors, as they will no longer need to fill in multiple identification details.
This will also reduce the duplication of information submitted to various ministries.
DigiLocker
Government will expand the scope of documents available on DigiLocker
In another move to improve the ease of doing business, the government has decided to increase the scope of its digital certificate depository DigiLocker.
The decision targeting the country's fintech sector will allow a broader range of documents on DigiLocker.
The Finance Minister also announced the decision to introduce enterprise-level DigiLockers for MSMEs (micro, small, and medium businesses), trusts, and other entities.
Reforms
KYC process to be simplified
Sitharaman also talked about simplifying the KYC (Know Your Customer) process in her budget speech. She said that the KYC process would be simplified "by taking a risk-based approach" instead of the current one-size-fits-all approach.
"The financial sector regulators will also be encouraged to have a KYC system fully amenable to meet the needs of digital media," she added.