Similarly, to open a dematerialized (demat) and share trading account or to invest in mutual funds, a copy of your Aadhaar card must be scanned and uploaded as address proof and PAN card as proof of identity in the e-KYC window.
It is said that we live in a digital age where everything is online. But the scenarios outlined only reinforce the need to always carry physical KYC documents.
Recently, the Union Cabinet approved the PAN 2.0 project with an issue of ₹1,435 million. The project will enable the use of PAN as a common identifier for the digital systems of specific government agencies.
It has been clarified that all current PAN card holders will automatically be eligible for the PAN 2.0 upgrade and there is no need to reapply. Enhancements such as a dynamic QR code and a centralized portal for all PAN-related services such as allotment, updates, correction and Aadhaar-PAN linkage are aimed at improving the usability of the PAN card, in line with the government’s digitalization objectives .
To apply for the new QR-enabled version, existing PAN card holders need to log into the income tax department’s unified portal and upload their identity and address proof. The e-PAN 2.0 is offered free of charge to all taxpayers. Individuals who want a physical PAN 2.0 card must apply for and pay a fee ₹50, if resident in India.
Practical use
The upcoming enhancements in the form of a dynamic QR code will serve to validate PAN data and provide information such as name, date of birth and photo when scanned, using a compatible reader application.
Still, there is tremendous potential to increase the practicality and coverage of the dynamic QR code feature and abolish the need for physical KYC documents. The dynamic QR code can be created to store all essential KYC data and cardholder details such as name, father/mother name, address, date of birth, photo and signature in encrypted form so that it can only be accessed and used with permission of the cardholder. security features of blockchain technology.
By integrating the Aadhaar card address details into the dynamic QR code, PAN 2.0 can become a universally acceptable single-point identity and address proof identification for investments across asset classes (equities, mutual funds, real estate). Dynamic QR codes can also act as a digital identity token, enabling seamless authentication at airports, hotels and other service points.
Imagine just flashing your e-PAN 2.0’s dynamic QR code for all KYC requirements – be it opening a bank, demat or stock trading account, airport security, hotel check-ins or whatever that concerns requesting a new SIM card for your phone.
Moreover, each PAN card already contains the scanned image of the photo and signature of the card holder. By incorporating the scanned photo and signature into PAN 2.0’s dynamic QR code, cardholders can easily digitally sign various KYC forms and agreements using their PAN-linked e-signatures, eliminating the need for wet ink signatures and physical submission of signatures is eliminated. such shapes.
Digital currency
The practicality of the dynamic QR code feature can be improved by integrating it with the Reserve Bank of India’s digital currency. Officially known as the Central Bank Digital Currency (CBDC), it is a digital form of the Indian rupee that is issued and regulated by the central bank.
Unlike cryptocurrencies, CBDC is a sovereign currency, offering the benefits of digital payment systems while maintaining the stability of fiat money. The RBI has already launched its digital currency ‘e-Rupee’ for both wholesale and retail financial transactions.
By embedding the dynamic QR code with the digital wallet linked to the ‘e-Rupee’ into various investment platforms, investors can instantly meet the KYC onboarding requirements and simultaneously execute their investment transactions in real-time, facilitating physical verification and interbank settlement are eliminated. delays.
The integration of PAN 2.0’s dynamic QR code with the ‘e-Rupee’ can provide a cost-effective alternative to traditional banking, allowing even unbanked users to securely transact in the sovereign digital currency. Unlike the Unified Payment Interface (UPI) framework, the RBI’s ‘e-Rupee’ works entirely in offline mode. It can also assist with international travel by conducting currency-independent, secure transactions without the hassle of foreign exchange delays.
Thus, the integration of PAN 2.0’s dynamic QR code feature with the Aadhaar card and the RBI’s digital ‘e-Rupee’ can indeed become a game changer in ensuring ‘paperless KYC’ and ‘walletless’ secure financial transactions, thereby the Modi government’s ‘Digital India’ initiative in a way never imagined before.
By promoting faster investment, simplifying KYC and improving travel and leisure, this synergy has the potential to reshape key sectors of the economy and mark a transformative step towards a digitally enabled financial ecosystem.
Mayank Mohanka is the founder of TaxAaram India and a partner at SM Mohanka & Associates.
