PAN Fraud Cases on the Rise: Vigilance Urged Amidst Increasing Misuse

New Delhi: Caution! Your Permanent Account Number (PAN) might be exploited. Individuals engaged in fraudulent activities are strategically using PAN for deceptive transactions, potentially inflating your annual income. Consequently, you might face tax demands. Instances of such fraud are on the rise in the nation.

Fraudsters are increasingly focusing on homemakers and farmers. Numerous incidents have emerged where deceased family members, long gone, have had income tax recovery notices issued in their names. Several instances have also surfaced where individuals obtained loans by misusing PAN. They only realized the damage to their credit score afterward.

In a similar incident, a housewife from Mumbai faced this issue when someone misused her PAN to sell her property valued at 1.3 crore rupees in 2011. Tax authorities issued a notice, attributing this amount to her income. Unfortunately, the illiterate woman suffering from cancer was unable to respond to the notice. This case is currently under review by the Income Tax Appellate Tribunal (ITAT).

Several instances of PAN card misuse have made headlines, including notable cases. For instance, a decade after Usha Soni passed away in Betul district, Madhya Pradesh, the Income Tax Department issued an income tax notice amounting to 7.5 crore rupees. Similarly, Rajasthan shopkeeper Nandlal received an IT notice exceeding 12 crore rupees, prompting him to file a complaint with the police. Numerous incidents involve loans taken in others’ names or the establishment of fake companies for GST fraud.

PAN Misuse:
Now the question arises: why is there an increase in PAN misuse, and what steps can be taken to prevent this fraud?

Fraudsters exploit loopholes, attributing the increase in PAN misuse, making preventive measures crucial to curb this trend. When you apply for a credit card or loan, a PAN card is mandatory. Banks and insurance companies often request a copy of your PAN. Fraudsters exploit your PAN for various fraudulent activities. It’s only when you receive an income tax notice, file your ITR, or review your credit score that you become aware of the fraud.

Tax and income tax expert Balwant Jain states that the current system lacks a foolproof solution to prevent PAN-related fraud. In such situations, exercising caution remains the most effective safeguard.

If any deceased family member’s PAN card is no longer needed, submit it to the income tax department. Unfortunately, there is currently no online procedure available for this purpose.

To deposit the PAN card, send a letter along with a copy of the death certificate to the local income tax officer. Ensure to obtain a receipt for your records. This step can help prevent numerous issues for you in the future.

How can you determine if your PAN has been subjected to any fraudulent activity?

The primary and simplest method is to routinely monitor the Annual Information Statement (AIS) on the Income Tax India website. Additionally, it is advisable to review your credit report at least annually. The credit report provides a comprehensive record of loans and EMI payments.

To determine if any company is unlawfully utilizing your PAN, visit the GST portal. Navigate to the ‘Search Taxpayers’ section and choose ‘Search by PAN’. Enter your PAN details along with the captcha, then click on search. If there is a registration under your PAN, the entire report will be displayed. Please proceed to lodge a complaint if you notice any discrepancies.

If you receive any notice from the income tax or GST department, it’s crucial not to disregard it. Respond promptly to the notice from the respective department. If you find yourself unable to respond, consider seeking assistance from a knowledgeable expert.