Stiffer penalty, jail terms to deter PAN, Aadhaar theft

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With galloping GST revenues triggering a wave of fiscal delight and thousands of stolen PAN and Aadhaar cards causing humongous GST evasion, the Centre is mulling a strict legal system to deter and punish identity theft including misuse of stolen Permanent Account Numbers and Aadhaar cards. The Economic Times has reported that the punishments envisaged for these offences include higher penalties and even imprisonment which could be incorporated in the Data Protection Bill that might be tabled in the impending session of Parliament.

The new plans of the government follow the raids in May and June in states such as Gujarat, Uttar Pradesh, Madhya Pradesh, Rajasthan, Delhi, Maharashtra, Kerala, Punjab where 4,000 shell companies and about 16,000 fake GST registrations were detected using stolen identities of beneficiaries of social security schemes. The outcome of this web of deceit has been GST evasion of more than Rs 30,000 crore.

The discovery of evasion of indirect tax on such a massive scale shocked the Centre that is contemplating to introduce a Bill in the monsoon session of Parliament to plug the holes in the otherwise healthy GST collection scenario. Six years after GST was introduced, the monthly collections seem to be steadying well above the Rs 1.5 lakh crore mark. The collections in April, May and June this year have been Rs 1.87 lakh crore, Rs 1.57 lakh crore and Rs 1.61 lakh crore respectively.

Had the leakage not happened, the figure could have easily moved close to or even surpassed the Rs 2 lakh crore mark – a figure that has not yet been breached.

“Penalty of misuse of PAN or Aadhaar is very low… Considering that both the Centre and states are losing substantial revenue, there is a need to tighten the framework. This is a matter of great concern and while technology is helping us check this, there si a need to have higher penalties to deter the culprits and we have sent strong recommendations from our end,” said a senior Finmin official. Currently, the penalty for misuse of PAN for a fraudulent end is Rs 10,000 or six months of imprisonment.

The recommendations have been sent to the ministry of electronics and information technology. These provisions are supposed to be included in the proposed Data Protection Bill.

Apart from strengthening legal teeth, the Central Board of Indirect Taxes and Customs is planning implementation of biometric authentication and geo-tagging of firms registered for GST.