CA Vinamar Gupta

CA Vinamar GuptaComprehensive Analysis of New Requirements of furnishing PAN and AIR Information w.e.f 01-01-2016

CBDT vide Notification No. 95/2015 dated 30-12-2015 has amended Rules for PAN and AIR Information. While the press release dated 15-12-2015, broadly discussed the likely changes in PAN requirements, the notification contains lot many creases required to ironed out as under:

General Requirements

1PAN to be quoted in all the documents pertaining to specified transactions
2Where person entering into transaction is Minor and does not have any income chargeable to tax in India, such person shall quote PAN of father or mother or guardian.
3A person who does not have PAN and enters into transaction specified in R. 114B shall make a declaration in F.60. Old F.60 not revamped since 01-12-2004 has been replaced with new F.60. New F.60 requires information about Father’s Name, date of birth and contact which was not required earlier. Information regarding Particulars of transaction has been elaborated to include date, amount , mode of transaction and names, number of jointly involved persons in transaction. Aadhaar Number, if available and acknowledgement number of PAN application (where PAN applied for) also required in New F.60. Earlier while document supporting address was required but now both ID and Address Proof along with document code and document identification number required. Also estimated Agricultural Income and non agricultural income to be provided. Earlier Form 61 which pertained to perons having agriculture income only has been rescinded and replaced with statement in Form 61 for providing information to the department.
4Form 60 is required to be retained for six years from end of financial year (not assessment year) in which transaction is under taken. E.g. transaction for AY 2016-17 is undertaken in FY 2015-16, then F 60 to be retained till 31-03-2022.
5Form 61 statement required to furnished electronically by 30th April and 31st October for declarations received till 31st March and 30th September. Since Form 61 has been introduced only wef 01-01-2016, the issue whether it shall include transactions from 01-10-2015 to 31-12-15 shall perturb the tax payer.
6Requirement of quoting PAN shall not apply to Central Government, State Government and the Consular Offices. However this exemption is not available for Local authorities, Improvement Trust, Development Boards
7

In case of non resident, requirement of quoting PAN/Form 60 shall apply for following transactions only:

i) Sale or Purchase of motor vehicle

ii) Sale or purchase of any immovable property

iii) Purchase of debentures/ bonds from issuing Compnay for amount > Rs. 50,000

iv) Purchase of units from issuing Mutual fund for amount > Rs. 50,000

v) Cash deposit exceeding Rs. 50000 in any one day with banking company or co-operative bank.

vi) Time Deposits With Banking Company or Co-operative Bank , Post Office,Nidhi, NBFC for amount exceeding Rs. 50000 or aggregating to more than five lacs during financial year

vii) Opening of account with banking company or co-operative bank (other than time deposits and basic saving accounts).

viii) Opening of Demat Account.

ix) Contract for sale or purchase of securities (other than shares) for amount exceeding Rs. One lakh per transaction

x) Sale or purchase of unlisted shares of a company for amount exceeding Rs. One lakh per transaction

xi) Payment of LIP aggregating more than Rs. 50,000 during financial year.

In Old rules, there was blanket exemption available to non resident from quoting PAN/providing declaration in F.60

8Last date of filing return of AIR Information has been shifted from 31 st August to 31st May of succeeding financial year u/R 114E(5).

New requirements regarding quoting of PAN for specified transactions along with requirement of furnishing AIR Information under relevant nature of transactions is provided below:

Sale or purchase of Motor Vehicle

1. Only Motor Vehicle covered by section 2(28) of Motor Vehicle Act 1988 and requiring registration by registering authority are covered which means that

a) Vehicle for use upon roads only shall require quoting of PAN. Air, Water vehicle are not covered.

b) Only mechanically propelled vehicles are covered. Manually propelled vehicle shall therefore stand excluded.

c) Vehicles running upon fixed rails are not covered

d) Vehicles of special type adapted for use in factory or any other enclosed premises are not covered.

e) Motor Vehicle shall include includes a chassis to which a body has not been attached and a trailer

f) Vehicles having lesser than four wheels and fitted with not more than 25CC engine are not covered.

g) All types of two wheeled vehicles like scooter, motor cycle etc are specifically excluded even if covered by definition of motor vehicle

2. In pre amended rules, two wheeled vehicles, inclusive of any detachable side-car having an extra wheel, attached were excluded. Amended rules though silent about detachable side car might still include two wheeled vehicles with detachable side cars.

3. In pre amended Rules, a registering authority as well as buyer and seller were required to ensure that document pertaining to sale or purchase contain PAN or that F.60 is obtained from other party failing such compliance.

4. However in amended Rules only seller is required to ensure that PAN is quoted on document obtained by him from the buyer and if PAN of the buyer is not available Form 60 shall be obtained from the buyer.

5. All eligible transactions irrespective of monetary limit are covered.

Sale or Purchase of Immovable Property

1. PAN to quoted for transaction exceeding Rs. 10 lacs. Also PAN to be quoted for transactions valued at more than ten lacs by stamp valuation authority, even if actual transaction is for lesser amount. [Older limit was Rs. 5 lacs]

2. However the transactions for which valuation by stamp authority is not required like leasehold rights, the amended rules may not applicable if actual transaction amount is ten lacs or less. Section 50C is not applicable to such transactions as per ITAT Mumbai in Atul G. Puranik and ITAT Pune in Kancast (P) Ltd.

3. In case of gifts, wills, trusts, power of attorney transactions since no sale or purchase is involved, R. 114B might not apply

4. Immovable Property is not defined in Income tax Act but as per General Clauses Act “Immovable property” shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth.

5. Agricultural Land shall also be included. However whether transactions of bayana sale shall also be covered is a moot point.

6. In pre amended Rules, a registering authority as well as buyer and seller were required to ensure that document pertaining to sale or purchase contain PAN or that F.60 is obtained from other party failing such compliance. However in amended rules, obligation is caste upon registering authority and seller only.

7. AIR Information of sale or purchase of immovable property for an amount of thirty lakh rupees or more or valued by the stamp valuation authority referred to in section 50C of the Act at thirty lakh rupees or more to be furnished by registration authority. In earlier Rule there was no requirement to send AIR Information where value exceeded Rs. 30 lacs on basis of valuation of stamp duty authority and not otherwise.

For General Transactions of Sale or Purchase of Goods or Services of any nature PAN to be quoted where amount exceeds Rs. Two lacs per transaction excluding following transactions :

a) Sale or purchase of motor vehicle where PAN to be quoted irrespective of amount

b) Sale of purchase of immovable property where PAN to be quoted for amount exceeding 10 lacs.

c) Sale or Purchase of Securities (other than shares) where PAN to be quoted for transactions exceeding Rs. One lac.

d) Sale of purchase of shares of unlisted Company where PAN to be quoted for transactions exceeding Rs. One lac.

e) Purchase of foreign currency in cash where PAN to be quoted for payment exceeding Rs. 50000 at any one time.

f) Purchase of units of Mutual funds from issuing mutual fund where PAN to be quoted for payment exceeding Rs. 50000.

g) Purchase of debentures or bonds from issuing company where PAN to be quoted for payment exceeding Rs. 50000

h) Purchase of RBI Bonds from RBI where PAN to be quoted for payment exceeding Rs. 50000

i) Payment in cash for services to Hotel or restaurant against a bill exceeding Rs. 50,000 at any one time.

j) Payment in cash for services in connection with foreign travel exceeding Rs. 50000 at any time.

1. Limit of two lacs shall apply whether transaction is conducted in cash or cheque. However for payments to Hotel, restaurants, payments for foreign travel, foreign exchange while limit for cash transactions is Rs. 50,000 , limit for non cash transactions only shall be two lacs.

2. It may also be pertinent to mention that at present u/s 206C(1D) TCS @ 1% required to be collected by seller for cash transactions only exceeding 2 lacs for bullion and exceeding 5 lacs for jewellery. Earlier requirement of quoting PAN where payment to dealer for amount equivalent and greater than 5 lacs(both cash and non cash) for purchase of bullions and jewellery is made done away and rather reduced to Rs. 2 lacs.

3. U/R 114C(2) , seller issuing bill to ensure after verification that PAN has been correctly furnished and mentioned in the document or that F.60 has been duly furnished with complete particulars where PAN is not available.

4. However all such sellers are not required to electronically furnish data about F. 60 to the department and it is only where audit is required u/s 44AB (including audit for presumptive taxation) that data is required to be furnished electronically in F. 61 besides retaining F.60 for six years from end of financial year (not assessment year) in which transaction is under taken. E.g. transaction for AY 2016-17 is undertaken in FY 2015-16, then F 60 to be retained till 31-03-2022.

5. Sale or purchase by non residents under this category and sale or purchase by Central Government , State Government and Consular Offices is outside the purview of this Rule and therefore requirement of quoting PAN shall not apply. However this exemption is not available for Local authorities, Improvement Trust, Development Boards.

6. Term service not defined under income tax law. Renting of immovable property is a declared service under service tax law for charging service tax but whether the same concept shall apply in income tax law is again a moot point. Employee providing his services to employer on the other hand is outside the purview of service tax law. Financial services like interest are also outside the purview of service under service tax law. Hence term service might need a little clarification.

7. AIR Information regarding receipt of cash payment exceeding two lakh rupees for sale, by any person, of goods or services of any nature to be furnished by any person who is liable for audit under section 44AB of the Act. Earlier no such AIR Information was required to be furnished.

Payment in cash to Hotel or restaurant against a bill or bills exceeding Rs. 50,000 at any one time:

1. If payment not exceeding Rs. 50,000 in cash is made at more than one time although cumulatively exceeding Rs. 50,000, requirement of quoting PAN may be obviated.

2. If there are multiple bills and payment is made against all of them at one time exceeding Rs. 50,000, the requirement of quoting PAN shall apply.

3. For payment through credit card, debit card, cheque, draft , RTGS quoting of PAN shall be required only if amount per transaction exceeds Rs. 2 lacs. Raising separate bills against separate services shall constitute separate transactions.

8. U/R 114C(2) , Hotel or restaurant issuing bill to ensure after verification that PAN has been correctly furnished and mentioned in the document or that F.60 has been duly furnished with complete particulars where PAN is not available.

9. However all such Hotels or restuarants are not required to electronically furnish data about F. 60 to the department and it is only where audit is required u/s 44AB (including audit for presumptive taxation) that data is required to be furnished electronically in F. 61 besides retaining F.60 for six years from end of financial year (not assessment year) in which transaction is under taken. E.g. transaction for AY 2016-17 is undertaken in FY 2015-16, then F 60 to be retained till 31-03-2022.

10. Old Limit was Rs. 25000 which has been enhanced to Rs. 50,000.

11. In earlier Rules, limit of Rs. 25000 applied to non cash transactions also, however the enhanced limit of Rs. 50,000 is applicable to cash transactions only.

Payment in cash in connection with travel to any foreign country or purchase of foreign currency exceeding Rs. 50,000 at any onetime :

1. Payment in connection with travel includes payment to a travel agent or a tour operator (who makes arrangements for air, surface or maritime travel or provides services relating to accommodation, tours, entertainment, passport, visa, foreign exchange, travel related insurance or other travel related services either severally or in package). Payment for foreign currency also separately covered. Foreign currency however gets covered under foreign exchange as per FEMA.

2. Payment in connection with travel includes payment to authorized person defined in FEMA (money changer not covered).

3. Payment in connection with travel includes payment towards fare.

4. In older Rules, travel to foreign country excluded travel to neighboring country and specified places of pilgrimage. However this distinction has been done away in new Rules and travel to neighboring countries requiring payment exceeding Rs. 50,000 in cash shall now require quoting of PAN.

4. If payment not exceeding Rs. 50,000 in cash is made at more than one time although cumulatively exceeding Rs. 50,000, requirement of quoting PAN may be obviated.

5. For payment through credit card, debit card, cheque, draft , RTGS quoting of PAN shall be required only if amount per transaction exceeds Rs. 2 lacs.

6. U/R 114C(2) , person issuing any document for foreign travel fare or travel agent or tour operator issuing bill to ensure after verification that PAN has been correctly furnished and mentioned in the document or that F.60 has been duly furnished with complete particulars where PAN is not available.

7. However all such person issuing any document for foreign travel fare or travel agent or tour operator are not required to electronically furnish data about F. 60 to the department and it is only where audit is required u/s 44AB (including audit for presumptive taxation) that data is required to be furnished electronically in F. 61 besides retaining F.60 for six years from end of financial year (not assessment year) in which transaction is under taken. E.g. transaction for AY 2016-17 is undertaken in FY 2015-16, then F 60 to be retained till 31-03-2022.

8. Old Limit was Rs. 25000 which has been enhanced to Rs. 50,000.

9. In Earlier Rules, limit of Rs. 25000 applied to cash payment only, and enhanced limit of Rs. 50,000 is also applicable to cash transactions only.

10. AIR Information regarding Receipt from any person for sale of foreign currency including any credit of such currency to foreign exchange card or expense in such currency through a debit or credit card or through issue of travellers cheque or draft or any other instrument of an amount aggregating to ten lakh rupees or more during a financial year to be furnished by authorized person under FEMA.

Transactions in Financial Instruments requiring quoting of PAN:

1Opening of Demat AccountThere was no such requirement in Rule 114B earlier but SEBI Circular dated 29-07-2010, required PAN for all existing and new DEMAT accounts w.e.f. 16-08-2010.
2Contract for sale or purchase of securities (other than shares) for amount exceeding Rs. One lakh per transactionEarlier sales or purchase of listed as well as unlisted shares also required quoting of PAN. Also purchase of listed shares from issuing company for Rs.50000 or more required quoting of PAN u/R 114B(n)However by requiring PAN for DEMAT Accounts, all transactions in listed securities shall get covered. In respect of unlisted shares requirements separately laid down .
3Sale or purchase of unlisted shares of a company for amount exceeding Rs. One lakh per transaction.Earlier also purchase of unlisted shares from issuing company for Rs.50000 or more required quoting of PAN u/R 114B(n) . Other transactions of sale or purchase in securities required quoting of PAN where contract value exceeded Rs. 1 lakh (whether or not purchased from issuing company)
4Purchase of debentures/ bonds from issuing Compnay for amount > Rs. 50,000

Earlier purchase of Rs. 50000 or more required quoting of PAN i.e. amount = Rs. 50000 also was covered.

AIR Information regarding receipt from any person of an amount aggregating to 10 lacs or more during a financial year for acquiring bonds or debenture issued by company or institution (other than renewals) to be furnished by company or institution. In old Rules there was limit of Rs 5 lakh or more per transaction for AIR Information

5Purchase of its units from Mutual fund for amount > Rs. 50,000

Earlier purchase of Rs. 50000 or more required quoting of PAN i.e. amount = Rs. 50000 also was covered.

AIR Information regarding receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring units of one or more schemes of a Mutual Fund (other than switching) to be furnished by Mutual Fund. Earlier the limit was two lacs per transaction for AIR Information.

6Purchase of RBI Bonds from RBI for amount > Rs 50000

Earlier purchase of Rs. 50000 or more required quoting of PAN i.e. amount = Rs. 50000 also was covered.

AIR Information regarding RBI Bonds > Rs. 5,00,000 dispensed with.

In above cases, buyer or seller is not required to ensure quoting of PAN/furnishing of F.60 but depository, participant, custodian of securities in case of demat accounts, principal officer of the company in case of transactions in securities(other than shares) and unlisted shares, trustee of Mutual Fund , Officer of RBI to ensure correct and quoting of PAN/obtention of F.60

Non residents also required to furnish PAN/Form 60 in all above cases except for purchase of RBI Bonds because RBI Bonds are not available to non residents for investment.

AIR Information regarding Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring shares (including share application money) issued by the company to be furnished . Earlier limit was Rs. One lakh per transaction and share application money was not included

AIR Information regarding Buy back of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to ten lakh rupees or more in a financial year to be furnished by listed company buying back its shares.

Banking Transactions:

Earlier R. 114 B was applicable to banking Companies,Co-operative Banks were not covered. However wef 01-01-2016, co-operative banks have been specifically roped in for all specified banking transactions here in :

1

Time Deposits

(any deposit which is repayable on the expiry of a fixed period) for amount exceeding Rs. 50000 or aggregating to more than five lacs during financial year)

With :

a) Banking Company or Co-operative Bank

b) Post Office

c) Nidhi

d) NBFC

Earlier only time deposits with banking company were covered and there was no aggregate cap of Rs. 5 lacs where individual time deposits are less than 50 thousands.

AIR Information regarding One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to ten lakh rupees or more in a financial year of a person to be furnished by banking company or co-operative bank, Post Office, NIdhi or NBFC.

2Opening of account with banking company or co-operative bank (other than time deposits and basic saving accounts).

The amended rules specifically provide that for basic saving accounts, requirement of quoting PAN shall not apply. Basic Saving Accounts are defined in RBI Circular dated 10-08-2012 as non frill account not having any requirement of minimum balance where maximum four withdrawals are allowed in a month. Holders of basic saving account are not allowed to open normal saving account. Earlier rules required quoting of PAN for basic saving accounts also. Time deposits have been excluded because they have been separately dealt. Accounts of Jan Dhan Yojna shall also get covered.

3Cash deposit exceeding Rs. 50000 in any one day with banking company or co-operative bank.

Earlier cash deposit=Rs. 50,000 also required quoting of PAN but now quoting of PAN required for payment> Rs. 50,000 only.

Multiple deposits lesser than fifty thousands but in aggregating exceeding Rs. 50000 in single day shall also require quoting of PAN.

AIR Information regarding Cash deposits aggregating to ten lakh rupees or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person to be furnished by banking company or cooperative society or Post Master General.

Further AIR Information regarding Cash deposits or cash withdrawals (including through bearer’s cheque) aggregating to fifty lakh rupees or more in a financial year, in or from one or more current account of a person to be furnished by banking company or cooperative society .Such Information was not required earlier.

4

Cash payment exceeding Rs. 50000 during any one day for purchase of draft or pay order or banker cheque of banking company or cooperative bank

Earlier cash payment=Rs. 50,000 also required quoting of PAN but now quoting of PAN required for payment> Rs. 50,000 only.

Air Information regarding Payment made in cash for purchase of bank drafts or pay orders or banker’s cheque of an amount aggregating to ten lakh rupees or more in a financial year to be furnished by banking company or cooperative society. Such information was not required earlier.

5

Application to banking company or cooperative bank or any other company or institution for issue of debit or credit card

Similar requirement existed earlier also subject to non inclusion of co-op banks as stated above.

AIR Information regarding payment against bills raised in respect of one or more credit cards in a financial year aggregating to one lakh or more if payment is made in cash and aggregating to ten lacs or more where payment is made in any other mode to be furnished by company or co-operative bank. Earlier there was aggregate limit of two lacs both for cash and other transactions.

6

Payment in cash or by / Bank Draft/ Pay order/ Banker Cheque to banking company or cooperative bank or any other company or institution for one or more prepaid payment instruments issued u/s 18 of Payment and Settlement Act 2007 aggregating to more than Rs. 50000 in a financial year

Prepaid payment instruments facilitate purchase of goods and services, including funds transfer, against the value stored on such instruments. The value stored on such instruments represents the value paid for by the holders by cash, by debit to a bank account, or by credit card. The prepaid instruments can be issued as smart cards, magnetic stripe cards, internet accounts, internet wallets, mobile accounts, mobile wallets, paper vouchers and any such instrument 5 which can be used to access the pre-paid amount (collectively called Prepaid Payment Instruments [Para 2.3 of Master Circular of RBI dated 01-07-2015 on Prepaid Payment Instruments [PPI]] As per Para 7.1maximum value of PPI (prepaid payment instrument) shall not exceed Rs. 50000. Semi Closed PPI range from 10,000 to 1 lakh.

Payments for Multiple PPIs though lesser than 50,000 for individual payment shall require quoting of PAN where aggregate during financial year exceeds Rs. 50,000.

In earlier rules, there was no requirement of quoting PAN for PPIs

AIR Information regarding Payments made in cash aggregating to ten lakh rupees or more during the financial year for purchase of pre-paid instruments to be furnished by banking company or cooperative society. Such information was not required earlier

Manager or officer of banking company or cooperative bank, post master, principal officer of company or institution shall ensure quoting of correct PAN on documents received or obtention of F.60

Payment of LIP aggregating more than Rs. 50,000 during financial year shall require quoting of PAN. Manager or officer of Insurance Compnay shall ensure quoting of correct PAN on documents received or obtention of F.60. There is no change in this regard.

Conclusion: The above discussed notification shall have deep impact on the way business transactions shall be conducted in times to come. It has been introduced as measure to check tax evasion. This notification is also a sequeal to pronouncements made in Budget Speech of Finance Minister in 2015. The notification has been published on 31st December bidding farewell to old practices and with message to usher in era of resorting to more transparency in reporting of transactions.

(Author :CA Vinamar Gupta, 53-E, DayaNand Nagar-II, Lawrence Road, Amritsar, Mob: 9356048001, ca.skumargupta@gmail.com)

More Under Income Tax

Posted Under

Category : Income Tax (20880)
Type : Articles (10827)
Tags : pan number (249)

Search Posts by Date

October 2016
MTWTFSS
« Sep  
 12
3456789
10111213141516
17181920212223
24252627282930
31