The pitfalls of using QR codes for PAN card verification

On November 26, 2024, the Cabinet Committee on Economic Affairs (CCEA) gave the green light to the Income Tax Department’s new project called PAN 2.0. This upgrade will add a QR code to PAN cards, and taxpayers will receive these updated cards for free. The central government says that the main aim of this project is to make the process of getting and managing PAN and TAN (Tax Deduction and Collection Account Number) easier and more modern. With a huge database of 780 million PANs and 7.32 million TANs, the project is designed to better serve taxpayers in India by bringing together different platforms and offering improved services for PAN and TAN holders.

But there are some downsides to using QR codes for such important information. In this article, we will look at why many people believe that depending on QR codes for PAN card verification might not be the safest choice.

When it comes to using QR codes for PAN card verification, there are several disadvantages that users should be aware of. Let’s take a closer look at some of the key drawbacks:

1. Security Concerns:
   One of the biggest disadvantages of using QR codes for PAN card verification is the security risk involved. QR codes can be easily duplicated or tampered with, leading to potential identity theft or fraud.
2. Limited Compatibility:
   Another downside of using QR codes for PAN card verification is the limited compatibility with certain devices or software. Not all smartphones or scanners may be able to read QR codes, making it challenging for some users to access their PAN card information.
3. Reliance on Internet Connectivity:
   QR codes typically require an internet connection to scan and access the information embedded within them. This can be problematic in areas with poor or no connectivity, leading to difficulties in verifying PAN card details.
4. Susceptibility to Damage:
   QR codes can easily get damaged or obscured, making them unreadable. This can be particularly problematic when trying to verify PAN card details in situations where the QR code is exposed to wear and tear.
5. Risk of Data Breaches:
   Using QR codes for PAN card verification can pose a risk of data breaches, as the information stored in the code can be accessed by unauthorized individuals. This can lead to privacy violations and potential misuse of sensitive personal data.

While QR codes offer a convenient way to verify PAN card information, they come with several disadvantages that cannot be ignored. From security concerns to compatibility issues and reliance on internet connectivity, there are various drawbacks associated with using QR codes for PAN card verification. It is important for users to weigh the pros and cons carefully before opting for this method of verification.

What is a PAN card with a QR code? Essential information

According to the Income Tax (I-T) Act regulations, it is prohibited for individuals in India to possess more than one PAN card. However, numerous taxpayers and businesses have been discovered holding multiple PAN cards and exploiting them for tax evaluation. To combat this issue of duplication and misuse, the Income Tax Department began issuing PAN cards featuring QR codes in July 2018. Here’s what you need to know.

PAN cards without QR codes are still fully operational

Since July 2018, the Income Tax Department has been providing PAN cards featuring an Enhanced Quick Response (QR) code. Nevertheless, this does not mean that the older versions of PAN cards are ineffective. The I-T Department has confirmed that both traditional PAN cards and e-PAN cards from the previous design will continue to be valid.

The QR code on a PAN card holds important details

The Enhanced QR code featured on modern PAN cards includes the applicant’s photograph and signature, as well as essential details such as the PAN number, name, parent’s name, and date of birth (DOB) or the date of incorporation/formation for business entities. All of this information is digitally signed and encoded within the QR code. Additionally, the Enhanced QR code is also available on e-PAN cards

How to scan the QR code on your PAN card

To scan the Enhanced QR code on your PAN card with your smartphone, first, get the PAN QR Code Reader app from the Play Store. After you install it, use your phone’s camera, which should ideally be at least 12MP and have auto-focus, to read the QR code.

What is the PAN 2.0 project?

The PAN 2.0 project is an e-governance initiative designed to modernize the Indian taxpayer registration system through technology-driven enhancements.

Right now, services related to PAN are spread out over three different websites:

1. e-Filing Portal

2. UTIITSL Portal

3. Protean e-Gov Portal

The PAN 2.0 project aims to consolidate these services into a single, integrated portal. This centralized platform will efficiently handle all PAN and TAN-related activities, including applications, updates, corrections, Aadhaar-PAN linking, re-issuance requests, and online PAN validation. By implementing this unified system, the Income Tax Department of India intends to streamline tax-related processes, minimize delays, and improve grievance redressal mechanisms.

Additionally, the project aims to establish PAN as a universal identifier for various digital systems utilized by designated government agencies throughout India.

What Will Happen to Current PAN Cards Lacking QR Codes?

Many taxpayers are understandably concerned about the validity of their existing PAN cards that do not feature QR codes. However, experts have confirmed that these cards will not become invalid.

Current PAN Cards Remain Valid
As long as a PAN card is linked to an Aadhaar number, it continues to be valid under the Income Tax Act of 1961. Therefore, there is no need to worry about its legitimacy.

Upgrading Is Not Required
Taxpayers have the option to upgrade their PAN cards to the new design with QR codes, but this is not compulsory. The upgrade is free of charge and offers faster service and enhanced data accuracy.

No Urgent Deadlines
To date, the tax department has not set a deadline for the transition to PAN 2.0. The implementation will take place in phases, allowing taxpayers sufficient time to adjust.

Additional Information:

QR Code Scams -Types, Examples, and Safety Tips

The use of QR (Quick Response) codes is becoming more and more common, and
unfortunately, so is the scammers’ use of them. Phishing through QR codes could
result in identity theft, loss of money, and contracting of viruses and malware.
QR codes are rather useful, but previously they have turned into a new favourite
of swindlers. Everything from getting lost in a website filled with phishing
frauds and fake websites to computer diseases such as viruses and other
financial risks that are allied with those squares.

WHAT IS A QR CODE SCAM?

It is quite surprising to notice how QR codes became a part of our daily lives,
after being so popular as a new trend in the year 2020. But with their rise
comes a darker side: QR code scams. These are actually fake links that normally
appear to be genuine links that would take you to another web page, attempt to
steal your personal information from your device, or even instil a virus in your
device.

Scammers incorporate them in different strategies, for example, fake coupons,
and mislead users about the login credentials of public Wi-Fi. It is recommended
to use QR codes that are seen in day-to-day life or those that contain familiar
content. Before scanning, one should always ensure that the scan code is
legitimate and it is advisable to use a QR code scanner that has added security
measures. The best strategy to counter these future digital threats is to be on
the lookout.

HOW DO QR CODE SCAMS WORK?

Recently, QR codes have been used more and more, but they also can be used for
negative intentions. Phony links can be developed, which, when scanned, will
take the consumer to a phishing site or install a virus on the individual’s
device.

HERE’S HOW QR CODE SCAMS WORK

1. The scammer proceeds to make a QR code that leads to a specific website that
   one cannot trust. Although this website appears to be a genuine website, it is
   also created to mislead you and steal your identity, suppose your login details
   or credit card number.
2. The scammer creates a QR code and fixes it in a public place such as a bus
   stop or a shopping mall. They may also send the QR code to you via email or text
   message. Then, there are the forms that appeal to the partnership of the two
   parties, in this case through text and an image of the QR code.
3. Normally, you use a smartphone and scan the QR code printed on the receipt.
   As a result, on your browser, the malicious website is opened for interaction.
4. This is information that you input when accessing the website in the account
   created with your details. After that, this information is presented to the
   scammer.

COMMON TYPES OF QR CODE SCAMS

As they are extremely convenient, QR codes are just about everywhere. From your
greengrocer to your favourite restaurant, just about everyone is using these
codes. This makes it easier for the scammers to reach their goal, which is to
bring you to a place where they can steal your money, your data, or both!

Here are some very common types of QR code fraud:

1. QR CODE PHISHING SCAMS:

Cybercriminals will send you a letter, a brochure, or an email that will contain
a QR code. When you scan it, you’ll be asked to fill in your personal details.
Once you fill them out, the information will go straight to the attacker, who
can access your accounts as and when they want.

2. STRANGER IN NEED QR SCAN FRAUD:

Here, someone will approach you with a crafty story, requesting you to transfer
some money to them through the QR code they show you. When you scan the code,
you give the scammer access to your banking account.

3. ONLINE MARKETPLACE QR CODE SCAM:

Someone might get in touch with you saying they wish to buy something from you.
They ask you to scan a code and may even transfer a small amount of ‘token
money’ to get your bank details.

4. QR CODE VIRUSES:

In many scenarios, only by scanning a QR code, you are inviting malware to cause
damage. Fraudsters can embed links to web portals that contain viruses and,
thus, easily compromise your data.

5. QR PAYMENT FRAUD:

A very common type of QR code fraud is payment fraud. Here, cybercriminals
tamper with the QR codes at places where a large number of transactions are
made, for example, a petrol station or a restaurant. They will cover up the
legitimate code and use it to fill up their own pockets.

WARNING SIGNS OF A QR CODE SCAM

QR codes are everywhere, but they can also be a get-through for cybercriminals.
Be wary of QR codes that:

1. Avoid scanning codes on flyers, stickers, or signs in unfamiliar places.
2. The website address should be recognisable and trustworthy.
3. Legitimate QR codes rarely ask for sensitive data.
4. A poorly designed code is a red flag.

REAL-LIFE EXAMPLES OF QR CODE SCAMS

It is almost impossible to live without seeing QR codes in our daily lives, but
they also bring with them a new way for scammers.

HERE ARE SOME REAL-LIFE EXAMPLES OF QR CODE SCAMS:

1. FAKE INVOICES

They send invoices with a QR code, and when the customer clicks on them, he or
she ends up on a fake page where he or she pays online. When the victim then
scans the code, he or she gets transferred to what appears to be an actual
website, only for the person’s payment information to be stolen.

2. MALICIOUS WEBSITES

Phishers develop a website with a QR code to have unsuspecting users scan the
code and lead them to compromised websites. Once the victim QR codes the
provided code, they land on a bad website which can harm the device or even
steal identity.

3. PHISHING EMAILS

Fraudsters send emails with a link that disguises itself as a legitimate company
logo and leads users to a fake login page. When the victim scans the code, they
are transferred to a site which swallows the login details.

Ref: https://www.hdfcergo.com/blogs/cyber-insurance/what-is-qr-code-scam

The Dark Side of QR Codes: Risks and How to Stay Safe

QR codes are convenient, easy to use, and can store much information in a small space. You can scan them with your phone and access websites, menus, coupons, tickets, and more. But QR codes can also pose security risks for you and your device.

Ref: https://www.nemko.com/blog/qr-codes-good-bad-and-evil

HOW TO PROTECT YOURSELF FROM QR CODE SCAMS?

1. Always be careful to only scan QR codes that you get from legitimate
   websites. If you have any doubts as to who it was that placed the code, do not
   pat the QR codes on the head.
2. One should also be wary of QR codes that are placed in public areas. These
   codes could have been manipulated in a way that, instead of leading you to an
   authentic website, takes you to a suspicious one.
3. This should be an app that has an inbuilt security service to scan the QR
   codes. These apps will assist you in identifying unsafe QR codes and steering
   clear of them.
4. If you are doubtful about the safety of scanning any QR code that is placed
   in the public domain, then do not attempt to scan it. It is better to be safe
   than repent later.

Just remember if you are unfortunate enough to have fallen for a QR code scam,
you should then report the matter to your bank or credit card firm. You should
also inform the authorities about the scam to which you have fallen victim.

Final Note: Stay informed and protect your sensitive information.

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