The 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.
A chart highlighting the key changes to Rule 114B of the Income-tax Act is attached.
|Nature of Transaction||Mandatory Quoting of Pan (Rule 114B)|
|1.||Immovable property||i. Sale/ purchase exceeding Rs.10 lakh;
ii. Properties valued by Stamp Valuation authority at amount exceeding Rs.10 lakh will also need PAN.
|2||Motor vehicle (other than two wheeler)||All sales/purchases|
|3.||Time deposit||i. Deposits with Co-op banks, Post Office, Nidhi, NBFC companies will also need PAN;
ii. Deposits Amount exceeding fifty thousand rupees or aggregating to more than five lakh rupees during a financial year will also need PAN
|4.||Sale or purchase of securities||Contract for sale/purchase of a value exceeding Rs.1 lakh|
|5.||Opening an account (other than time deposit) with a banking company.||i. Basic Savings Bank Deposit Account excluded (no PAN requirement for opening these accounts);
ii. Co-operative banks also to comply
|6.||Hotel/restaurant bill(s)||Cash payment exceeding Rs.50,000/-.|
|7.||Cash purchase of bank drafts/ pay orders/ banker’s cheques||Exceeding Rs.50,000/- on any one day.|
|8.||Cash deposit with banking company||Cash deposit exceeding Rs.50,000/- in a day.|
|9.||Foreign travel||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)|
|10.||Credit card||Application to banking company/ any other company/institution for credit card
Co-operative banks also to comply.
|11.||Mutual fund units||Payment exceeding Rs.50,000/- for purchase.|
|12.||Shares of company||i. Opening a demat account;
ii. Purchase or sale of shares of an unlisted company for an amount exceeding Rs.1 lakh per transaction.
|13.||Debentures/ bonds||Payment exceeding Rs.50,000/-.|
|14.||RBI bonds||Payment exceeding Rs.50,000/-.|
|15.||Life insurance premium||Payment exceeding Rs.50,000/- in a year.|
|16.||Purchases or sales of goods or services||Purchase/ sale of any goods or services exceeding Rs.2 lakh per transaction.|
|17.||Cash cards/ prepaid instruments issued under Payment & Settlement Act||Cash 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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(Republished with Amendments by Team Taxguru)