Amidst the on going rumours , the one which is most peculiar and a generic question come acrossed is ” whether PAN is mandatory for depositing cash in excess of Rs.50,000/- or Rs.2,50,000/- in banks , post office etc;?”
In order to answer the question let us go through the criteria for which banks are mandated to collect the PAN from the depositors .
As per Rule 114B of Income Tax Rules 1962 as amended by Notification No. 104/2016-Income Tax Dated 15.11.2016, every person is required to quote his PAN in connection to certain specified transactions , of the specified transactions one of the transaction is “ deposit of cash in excess of Rs.50,000 per day or depositing cash in excess of Rs.2,50,000/- between the period 9th Nov 2016 to 30th Dec 2016 in total ”
For the same rule , Proviso 2 provides for exemption from quoting PAN if a declaration in Form 60 is made and submitted by the person to the bank.
Whereby if you have cash in excess of 2,50,000/- , the source of which can be established , the same can be deposited in the bank without any panic by giving a declaration in Form 60.
However interestingly on 16th Nov 2016 RBI had issued a circular RBI/2016-17/135 DCM (Plg) No.1287/10.27.00/2016-17 Dated: 16/11/2016 stating that ;
“ 1. Anybody depositing more than 50,000/- in cash in their bank account has to submit a copy of the PAN card in case the bank account is not seeded with PAN
2. The banks are therefore advised to take note of the above and ensure strict compliance with the provisions of 114B of the Income Tax Rules 1962 “
Clearly the above circular is not in sync with Rule 114B as in the rule 114B specifically there is an exemption provided for cases where any person does not have a PAN . A clarification in this regard may be soon expected by RBI as the intent for providing exemption for quoting plan is specifically provided in the rule in order to remove genuine hardships.
If any person does not have a PAN and the person is able to substantiate the savings in cash , the same can be deposited with the banks without any worries and without any limits !! Provided CBDT does not comes back and amend the Rule 114B.