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You may soon need to mention your permanent account number (PAN) to invest more than Rs 50,000 in national savings certificates (NSC), or to buy a unit-linked insurance policy where premium payment exceeds Rs 1 lakh. The government is giving finishing touches to a proposal to make the taxpayer identification number mandatory to invest in several small savings schemes, a government official said.

It is also learnt that  the finance ministry has decided to extend quoting of PAN to other financial instruments but with suitable thresholds so that the requirement does not become a hurdle for small investor.

The proposal is set to be implemented after the general elections, the official added.

PAN is a 10-digit alphanumeric identification number which is allotted to any juridical entity, individual or company to be quoted with income-tax returns.

It is increasingly being required to be tagged with various financial transactions and information.

The interim budget pegs net collections under savings certificates, most of which would be in NSC, at Rs 4,100 crore. The mobilisation under small savings schemes has dropped in recent years as banks have been offering higher returns on fixed deposits. NSC, for instance, offers 8% against nearly 10% offered by banks recently.

The move will help income-tax authorities to check tax evasion. PAN allows them to establish an audit trail, as information can be matched with income and investment details disclosed in the tax return.

The move follows an announcement in this regard by the then-finance minister P Chidambaram in his Budget 2008 speech.

“The fear of PAN has virtually disappeared. PAN is now the sole identification number for all participants in the securities market. I propose to extend the requirement of PAN to all transactions in the financial market subject, however, to suitable threshold exemption limits,” the minister had said.

Savings bank accounts will be excluded from the ambit of PAN as it could become a hindrance in the way of financial inclusion.

Presently, quoting of PAN is mandatory for credit card application, investment in mutual funds, time deposits of more than Rs 50,000 with any banking company or opening of savings account and deposit of more than Rs 50,000 with post office.

PAN is not required for investment in NSC, Kisan Vikas Patra and monthly income schemes from post office. Transactions such as purchase or sale of property, sale or purchase of a motor vehicle requiring registration other than two-wheelers, and payment to hotels and restaurants against bills exceeding Rs 25,000 also require PAN.

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