CA Satish Sarda

Sarish SardaThe Government in its commitment to curb the circulation of black money and widening of tax base has made quoting of PAN compulsory for specified transactions.. To collect information of certain types of transactions from third parties in a non-intrusive manner, the Income-tax Rules require quoting of Permanent Account Number (PAN) where the transactions exceed a specified limit. Persons who do not hold PAN are required to fill a form and furnish any one of the specified documents to establish their identity.

Quoting of PAN will be required for transactions of an amount exceeding Rs.2 lakh regardless of the mode of payment.

The changes to the Rules are effective from 1st January, 2016.

A chart highlighting the key changes to Rule 114B of the Income-tax Act is attached.


Sl.
NATURE OF TRANSACTIONMANDATORY QUOTING OF PAN (RULE 114B)
Requirement upto 31.12.2015New requirement w.e.f. 01.01.2016
1.Immovable propertySale/ purchase valued at Rs.5 lakh or morei. Sale/ purchase exceeding Rs.10 lakh;

ii. Properties valued by Stamp Valuation authority at amount exceeding Rs.10 lakh will also need PAN.

2Motor vehicle (other than two wheeler)All sales/purchasesNo change
3.Time depositTime deposit exceeding Rs.50,000/- with a banking companyi. Deposits with Co-op banks, Post Office, Nidhi, NBFC companies will also need PAN;

ii. Deposits aggregating to more than Rs.5 lakh during the year will also need PAN

4.Deposit with Post Office Savings BankExceeding Rs.50,000/-Discontinued
5.Sale or purchase of securitiesContract for sale/purchase of a value exceeding Rs.1 lakhNo change
6.Opening an account (other than time deposit) with a banking company.All new accounts.i. Basic Savings Bank Deposit Account excluded (no PAN requirement for opening these accounts);

ii. Co-operative banks also to comply

7.Installation of telephone/ cellphone connectionsAll instancesDiscontinued
8.Hotel/restaurant bill(s)Exceeding Rs.25,000/- at any one time (by any mode of payment)Cash payment exceeding Rs.50,000/-.
9.Cash purchase of bank drafts/ pay orders/ banker’s chequesAmount aggregating to Rs.50,000/- or more during any one dayExceeding Rs.50,000/- on any one day.
10.Cash deposit with banking companyCash aggregating to Rs.50,000/- or more during any one dayCash deposit exceeding Rs.50,000/- in a day.
11.Foreign travelCash payment in connection with foreign travel of an amount exceeding Rs.25,000/- at any one time (including fare, payment to travel agent, purchase of forex)Cash payment in connection with foreign travel or purchase of foreign currency of an amount exceeding Rs.50,000/- at any one time (including fare, payment to travel agent)
12.Credit cardApplication to banking company/ any other company/institution for credit cardNo change.

Co-operative banks also to comply.

13.Mutual fund unitsPayment of Rs.50,000/- or more for purchasePayment exceeding Rs.50,000/- for purchase.
14.Shares of companyPayment of Rs.50,000/- or more to a company for acquiring its sharesi. Opening a demat account;

ii. Purchase or sale of shares of an unlisted company for an amount exceeding Rs.1 lakh per transaction.

15.Debentures/ bondsPayment of Rs.50,000/- or more to a company/ institution for acquiring its debentures/ bondsPayment exceeding Rs.50,000/-.
16.RBI bondsPayment of Rs.50,000/-or more to RBI for acquiring its bondsPayment exceeding Rs.50,000/-.
17.Life insurance premiumPayment of Rs.50,000/- or more in a year as premium to an insurerPayment exceeding Rs.50,000/- in a year.
18.Purchase of jewellery/bullionPayment of Rs.5 lakh or more at any one time or against a billDeleted and merged with next item in this table
19.Purchases or sales of goods or services No requirementPurchase/ sale of any goods or services exceeding Rs.2 lakh per transaction.
20.Cash cards/ prepaid instruments issued under Payment & Settlement ActNo requirementCash payment aggregating to more than Rs.50,000 in a year.

 

Where a person, entering into any transaction referred above, is a minor and who does not have any income chargeable to income-tax, he shall quote the permanent account number (PAN) of his father or mother or guardian, as the case may be, in the document pertaining to the said transaction.

Further, where any person who does not have a PAN and who enters into any transaction specified above, he shall make a declaration in Form 60 giving therein the particulars of such transaction.

The above changes in the rules are expected to be useful in widening the tax net by non-intrusive methods. They are also expected to help in curbing black money and move towards a cashless economy.

These provisions have made additional compliances for the assesses. They are already overburdened with the existing compliances under various laws. Is it ‘ Ease of doing business’?

(Author is Past Chairman-Nagpur Branch Of ICAI)

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Category : Income Tax (20860)
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Tags : CA Satish Sarda (9) pan number (249)
  • ramjiyahoo

    Is pan compulsory for cellphone connection, in chennai no vendor insist pan for new sim, but this is a good proposal by govt