The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, is an Act of the Indian Parliament that provides legal backing for the Aadhaar project. The project, which began in 2009, lacked legislative authority until the Act was introduced as a Money Bill by Finance Minister Arun Jaitley on March 3, 2016. The Act's core purpose is the efficient, transparent, and targeted delivery of subsidies, benefits, and services funded from the Consolidated Fund of India, by assigning a unique 12-digit identification number to residents.
The Act established the Unique Identification Authority of India (UIDAI) as the statutory body responsible for issuing and managing Aadhaar numbers. It works by collecting demographic and biometric information, including a photograph, ten fingerprints, and two iris scans, which are stored in the Central Identities Data Repository (CIDR). Section 7 makes Aadhaar mandatory for availing state subsidies and benefits. Crucially, Section 9 clarifies that the Aadhaar number is proof of identity, not of citizenship or domicile.
The Act is closely connected to the Supreme Court's privacy jurisprudence, following the Justice K.S. Puttaswamy (Retd.) v. Union of India judgment in August 2017, which recognized the right to privacy as a fundamental right under Article 21. In September 2018, a five-judge Constitution Bench upheld the Act's constitutional validity but restricted its scope. The judgment struck down Section 57, which had allowed private entities to demand Aadhaar for services. Subsequently, the Aadhaar and Other Laws (Amendment) Act, 2019, was passed to allow the voluntary use of Aadhaar for opening bank accounts and obtaining mobile connections. However, the Supreme Court upheld its mandatory use for linking with PAN and filing Income Tax Returns.