When the new rule will come into effect and whether Aadhaar will completely replace PAN is not known
The government might soon make Aadhaar mandatory for buying shares and mutual funds to prevent the conversion of black money into white through the stock market, the Economic Times reported on Thursday.
According to the financial daily, the government and the Securities and Exchange Board of India (Sebi) are planning to link financial market transactions to Aadhaar after, according to two sources cited by the report, the former came to realise that the permanent account number (PAN) might not be sufficient in putting an end to tax evasion.
“We have been told that making Aadhaar compulsory is in the offing,” a top official with a financial services firm told the financial daily. (economic policy)
However, according to a CEO of a brokerage firm, who spoke to the financial daily on the condition of anonymity, the move could unsettle some “regional players” who could see a “dip in activity even in IPO market”. However, the source said this dip would be temporary. According to the unnamed CEO, these players would be worried over how many clients would remain once Aadhaar is made mandatory.
According to the report, when such a compulsory linking will come into effect is unclear. Further, it is not known yet whether the Aadhaar will serve as the sole identification number for financial market transactions, thereby replacing the PAN.
Is PAN not enough?
Brokers who spoke to the financial daily said that PAN has not been able to prevent people from using the stock market for money laundering. They said that multiple PANs and fake demat accounts were being used to bring in black money into the stock market.