Amendment to the provisions relating to Quoting of “PAN”

In order to collect information for 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. In order to bring a balance between burden of compliance on legitimate transactions and the need to capture information relating to transactions of higher value, the Government has enhanced the monetary limits of certain transactions which require quoting of PAN. In this regard the Government has with effect from 1st January, 2016, amended Rule 114B of the Income Tax, Act 1962 regarding Financial Transactions, where quoting of PAN is mandatory. The key highlights are as detailed below:

S.No.

Nature of Transaction

Mandatory Quoting of PAN (Rule 114B)

Existing Requirement

New Requirement

1. Immovable Property Sale/ purchase valued at Rs.5,00,000 lakh or more
  1. Sale/ purchase exceeding Rs.10,00,000 lakh;
  2. Properties valued by Stamp Valuation authority at amount exceeding Rs.10,00,000 lakh will also need PAN.
2. Motor vehicle (other than two wheeler) All sales/purchases No change
3. Time deposit Time deposit exceeding Rs.50,000/- with a banking company
  1. Deposits with Co-op banks, Post Office, Nidhi, NBFC companies will also need PAN;
  2. Deposits aggregating to more than Rs.5,00,000 lakh   during the year will also need PAN
4. Deposit with Post Office Savings Bank Exceeding Rs.50,000/- Discontinued
5. Sale or purchase of securities Contract for sale/purchase of a value exceeding Rs.1,00,000 lakh No change
6. Opening an account (other than time deposit) with a banking company. All new accounts
  1. Basic Savings Bank Deposit Account excluded (no PAN requirement for opening these accounts);
  2. Co-operative banks also to comply
7. Installation of telephone/ cell phone connections All instances Discontinued
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 cheques Amount aggregating to Rs.50,000/- or more during any one day Exceeding Rs.50,000/- on any one day.
10. Cash deposit with banking company Cash aggregating to Rs.50,000/- or more during any one day Cash deposit exceeding Rs.50,000/- in a day.
11. Foreign travel Cash 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 card Application to banking company/ any other company/institution for credit card No change.Co-operative banks also to comply
13. Mutual fund units Payment of Rs.50,000/- or more for purchase Payment exceeding Rs.50,000/- for purchase.
14. Shares of company Payment of Rs.50,000/-  or more to a company for acquiring its shares
  1. Opening a demat account;
  2. Purchase or sale of shares of an unlisted company for an amount exceeding Rs.1 lakh per transaction.
15. Debentures/ bonds Payment of Rs.50,000/- or more to a company/institution for acquiring its debentures/ bonds Payment exceeding Rs.50,000/-
16. RBI bonds Payment of Rs.50,000/-or more to RBI for acquiring its bonds Payment exceeding Rs.50,000/-.
17. Life insurance premium Payment of Rs.50,000/- or more in a year as premium  to an insurer Payment exceeding Rs.50,000/- in a year.
18. Purchase of jewellery/bullion Payment of Rs.5,00,000 lakh or more at any one time or against a bill Deleted and merged with next item in this table
19. Purchases or sales of goods or services No requirement Purchase/ sale of any goods or services exceeding Rs.2,00,000 lakh per transaction.
20. Cash cards/ prepaid instruments issued under Payment & Settlement Act No requirement Cash payment aggregating to more than Rs.50,000 in a year.

Note: If an individual does not have a PAN, they will need to give a declaration, using Form 60, explaining the reason for not having one. Also if an individual quotes an incorrect PAN, the department can levy a penalty of INR 10,000 (Rupees Ten Thousand only) under Section 272B. Lastly, if a taxpayer is selected for scrutiny & is unable to explain the source of high-value investments, deposit or expenditure, there can be penalty up to 300% of the unpaid tax.

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