Why You Should Link Your Aadhar Card to e-File Income Tax Returns?

Aadhar linking is one of the biggest topic of relevance in our nation today. The pros and cons are being fiercely debated and the Government’s claims of it being the golden key to prosperity is being challenged as well. A few months ago, the mandate to link Aadhar with other important documents was declared. From mobile numbers to bank accounts, the government wanted our Aadhar card to be linked to all.

There were messages that first pleaded and then almost threatened the customer of dire consequences, if said linking wasn’t done. Yet, keeping persuasive tactics aside, linking one’s Aadhar card does offer some great benefits to the common man, most notably in the ease of income tax filing.

The basic premise is to link Aadhar with the PAN card to make tracking financial transactions simpler and more accessible to the government. The financial transactions between different banks and institutions have spawned ‘parallel economies’ that the government allegedly wants to integrate into a single, unified economy. This will generate better visibility of the nation’s financial situation and help streamline future legislation around taxation and personal finance.

Linking Aadhar is just the first step towards achieving a uniform digital economy that has continued to elude India for years. When financial transactions become transparent, tax evasions also decline. Reducing tax evasion is one of the key promises of Aadhar.

Why Should You Link Aadhar - The Broad Benefits

By linking Aadhar card with your PAN card, creation of multiple PAN cards won’t be possible. Up until recently, people used multiple PAN cards to evade taxes. People who paid taxes diligently complained that the vast majority of the population did not pay taxes and that they belonged to a minority. Uniform taxation can be achieved by linking everyone’s Aadhar card. The creation of a single identity also helps a citizen benefit from various government schemes like the pension scheme and the LPG subsidy.

In fact, it was revealed that the government ended up scrapping 23 million fake ration cards due to the emergence of the Aadhar card. The government also saved 14,000 crores in food subsidy due to Aadhar. This helps the common man since the right schemes reach the right people and the chances of the benefits being lost to corruption are less.

Once Aadhar is linked to bank accounts, the government will already have a picture of the kind of taxes that can be expected. The financial status of an individual is also available for analysis and such transparency helps in a more accurate calculation of macro-economic parameters. This helps the government to plan the revenue estimates and other regulations that the Reserve Bank of India might implement in the future. It was frequently complained that the RBI did not have an adequate estimate of the actual economic scenario and that the regulations passed were too   for the common man sometimes. With Aadhar linking in place, these issues will be eliminated.

Direct Impact of Aadhar on e-Filling Income Tax

Let us now look at the process of e-filling income tax and the way linking Aadhar Card with PAN will revolutionize it.

The older process of filling income tax involved the following steps in the same or slightly different order.

  • Get a PAN card, if you don’t already have one
  • Prepare the form 16 and other documents
  • Submit the form 16 and other documents by mailing them

Before, there was the issue of mailing physical documents in time and maintaining them. Not to forget, the investment proofs’ submission was another headache that ate up the time and peace of mind of many a citizen.

The old income tax filing process was also difficult to track. It was not always possible to warn citizens who did not file their taxes on time or citizens who missed filing them altogether. The citizens who filed on time had sometimes no way of knowing if their documents actually reached and been submitted in time. There was also the previously mentioned issue of tax evasion that occurred.

With your Aadhar linked, the process has become immensely simple. One simply has to login to the government’s e-filling website and submit their returns. By entering the Aadhar number, a citizen’s PAN and other details are instantly retrieved. By submitting the Form 16 documents electronically, the government can view tax submitted against the income registered in the bank accounts. It is also easy to just upload all these documents than physically trying to courier a bunch of documents on a busy day.

Additionally, the tracking of this process is completely online and is also linked to your phone number (that you, also, link with your Aadhar card).  Also, the filing of investment returns has become simpler with the submission mechanism being electronic as well. The entire process of e-filling income tax returns has become much simpler than before due to the linking of the Aadhar card.

Other Benefits of Linking Aadhar

Linking of the Aadhar card also offers numerous other benefits to the common man.

  • Reduction in fraudulent activity

Aadhar is slated to make the process of income tax filing more secure and foolproof. This means that the chances of your information being misused for illegal filings or used to convert black money to white money are lesser and will slowly be eliminated.

  • Pension on time

We are all aware of the amount of time it takes to process any pension scheme in India. When the body is tired due to advanced age, it is tough to run around trying to address the formalities required to enroll in a pension scheme. This frustrates honest taxpayers even more who think the government is not paying its dues. With Aadhar, the whole process has been digitized and streamlined. It is also more secure, so no unauthorized person can gain access to your pension scheme benefits.

  • Smoother and faster issuance of passport

Passports can be the cause of a lot of stress in our lives. Updating them, getting a new one, renewing an expired one are all major tasks that call for a lot of time and patience. With the Aadhar card, the process of issuing a passport or updating it can be completed in a week, instead of months. Such a benefit enhances the taxpayers confidence in the system.

  • Digital Life Certificate

It is important to prove that one is alive to keep receiving the benefits from the various pension schemes one has subscribed to. As funny as it may sound, it is a legitimate requirement with financial institutions that disburse pension. This process has also become simple as with a Digital Life Certificate and an Aadhar number pensioners can receive their pensions at home.

  • Provident fund disbursement

Individuals who have linked their Aadhar can enjoy the benefits of the fact that their provident funds will now arrive directly in their bank accounts. This is also a major financial benefit. 

There are many folks who are concerned about the repercussions of Aadhar linking. Some say that it will require upgradation to better data security mechanisms by the government. Some others are expressing concerns of excessive transparency infringing an individual’s privacy. While the government strives to allay these fears and help citizens embrace the idea of Aadhar, it is good to know that nations like the United States function smoothly with a single identification number. A single point of identification has always helped nations in the long run.


When Aadhar came into the common man’s life, it was greeted with some skepticism. But today, the process of linking Aadhar card is slowly becoming a normalized concept in everyday life. The linking of Aadhar has all the benefits mentioned above with a major impact on the process of e-filling the income tax. It is also a very significant step towards having a single economy.

The reduction of tax evasion, the emergence of greater visibility, the correct disbursement of government benefits are all advantages that nudge the common man into linking his Aadhar card. This is the first step to a truly digital economy and, hopefully, in a series of measures that the country badly needs to regularize and standardize its economic processes.

Written By: PolicyBazaar