Transgender Tax Filing

Aadhaar cards belonging to a lot of transgender people often have the gender "transgender" written on them. However, during the application process, the PAN card only accepts "male" and "female" applicants. Many members of the transgender community as a result have PAN cards with names that are different from those on their Aadhaar cards and the gender they were assigned at birth.

The primary effect of the difference was the failure to file income tax forms.

In March 2018, it came to light that while filing Income Tax Returns for transgender many difficulties were arising because of problems in the documentation.

Filing of tax returns requires a valid PAN card, as well as Aadhaar card. The third gender option was not available on the PAN card. Transgender people used to list their gender as either female or male on their PAN card, and as transgender on their Aadhaar card. Since these two documents have to be linked to each other and both have to be used for tax filing, there was a mismatch when they tried to file taxes. The website didn’t accept their Aadhaar numbers.

Following concerns taken up by a trans-person with the authorities, the e-filing portal incorporated the transgender option. Necessary amendments were also made in the CPC-ITR (Central Processing Centre- Income Tax Returns). This has made transgender tax filing online possible.

PAN for Transgender Person

Even after the provision for paying taxes, the actual problem persisted because there was still a mismatch between the gender mentioned on PAN card and that mentioned on Aadhaar card. This effectively rendered the PAN card useless for transgender people. Within a month, the Central Board of Direct Taxes (CBDT) announced a new option in the gender column for Form 49A (PAN card application).

The notification was issued under Sections 295 and 139A of the Income Tax Act. The amendment thus affected got reflected in Form 49A (Indian citizens application form for PAN) and Form 49AA (PAN application for individuals who are not Indian citizens). Form 49A and Form 49AA earlier had only two gender options- female and male. Now, a PAN card can officially mention a person as transgender.

This has made not just tax returns, but also a host of other things like bank documentation and transactions, passport documentation, etc., easier for transgender people as a lot of these processes require both PAN card and Aadhaar card, which they can now link. These steps towards tax policy and gender equality have been significant.