Indian taxpayers urged to verify PAN card against unauthorised use

Personal identification numbers in India can become vectors for financial liability if exploited for fraudulent purposes, tax authorities warn. Even individuals whose legitimate income falls below taxable thresholds face significant risk of substantial tax demands if their PAN cards are used without authorisation for large commercial transactions.

A recent case illustrates the scope of the problem. A contract cook in Delhi received a tax notice demanding Rs 4 crore after allegedly illicit cash sales totalling Rs 24.62 crore were registered against her PAN card. The disparity between the worker's actual income and the transactions recorded in her name triggered an investigation by tax officials.

The mechanism of PAN misuse typically involves third parties registering transactions—often cash sales of goods or services—under someone else's PAN without their knowledge. This inflates the victim's apparent income and creates corresponding tax obligations. Victims may not discover the fraud until they face notices from the tax authority demanding payment on transactions they never conducted.

To protect themselves, taxpayers should regularly cross-reference their PAN records with tax department databases. The Income Tax Department allows individuals to review their transaction history and file corrections if discrepancies are identified. Monitoring credit profiles and maintaining records of all personal business activities provides additional safeguards against fraudulent attribution of income.