Enhanced security features, better data management, and a single business identifier are some of the features of 2.0 that will prompt old PAN Card holders to upgrade for their good, expert says
Union Minister Ashwini Vaishnav on Monday announced the PAN 2.0 project which is set to modernise the Permanent Account Number (PAN) system. PAN 2.0 is introducing a QR code to streamline tax compliance and improve data security for taxpayers. Taxpayers should know that the updated PAN card is optional and free of cost, however, it is important to know its necessity and implications for existing PAN cardholders.
With PAN 2.0 the government aims to simplify and unify business and individual taxpayer identification and make PAN a Common Business identifier. This upgrade integrates PAN with other identifiers like TAN and TIN, providing a seamless, single-point solution for compliance and financial transactions.
Says CA Ashish Niraj, Partner, A S N & Company, Chartered Accountants, “It will be a single source of truth and data consistency. For long there was a need for such a single identifier. Taxpayer registration will become more technologically advanced. Also, there will be enhanced security features for data protection.”
According to CA Niraj, taxpayers should upgrade to new QR-based PAN Cards. “Enhanced security features, better data management, and single business identifier are some of the features of 2.0 which will prompt old PAN Card holders to upgrade for their good. Also As announced it will be free so there will not be any financial burden on taxpayers and in my view, they must upgrade,” he advises.
“Additionally, the embedded QR code stores additional details like the cardholder's photo and signature, supporting faster processing and reducing errors,” informs Sujit Bangar, Founder, Tax Buddy.
“Any individual applying for a new PAN card will have these features included automatically,” informs Anand Kumar Bajaj, Founder, MD & CEO, PayNearby.
Yes, the existing PAN cards will remain valid with no change in their status. "However, taxpayers now have the option to upgrade to a new version that includes a QR code for enhanced convenience and security," says Sudhir Kaushik, Co-founder & CEO, Taxspanner. He further adds, "This upgrade can be done at no additional cost, providing an easy way for individuals to access digital verification features without any extra financial burden."
“Although the older PAN cards can still be used, the adoption of automated systems in the future might favor QR-enabled cards. Upgrading now ensures compliance and smooth financial interactions, avoiding any potential disruptions later,” Bangar states.`
Says CA Niraj, “Non-upgraded PAN cards will have limited use whereas PAN 2.0 will be accepted at many places. As per the announcement presently upgradation is made optional and not mandatory therefore in the near future there will not be any operational issues for existing uses.
Eventually, the government may make it compulsory for business users first and other users later, he opines.
Says Bangar, “Even though traditional PAN cards are valid, they might present operational challenges as digital systems increasingly adopt QR-based verification. Financial institutions and service providers could prioritize QR-enabled PANs for faster authentication, leading to delays for individuals using older cards. As processes become more automated and reliant on modern technology, upgrading to the QR-based PAN card can help taxpayers avoid complications in financial dealings and regulatory compliance.”
Recently, there have been numerous instances where PAN or other KYC Data submitted by users for any specific purpose has been misused for various wrongdoings, etc. “With PAN Vault System and OTP Based Authentications, user data will be safe and its access will be given to only authorised users based on OTP. Whenever any entity tries to use PAN 2.0 Data PA 2.0 holder may get OTP to authenticate it,” CA Niraj explains.
Adds Bangar, “It also aligns with global best practices for data protection, making financial processes safer and more transparent. By implementing this system, taxpayers benefit from increased trust and reduced chances of fraud.”
The government has not yet announced a timeline or deadline for mandatory upgrades to the new PAN card format. However, the phased rollout of PAN 2.0 aims to ensure a smooth transition for over 74.67 crore PAN cardholders in the country.