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 1^st 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)
S.No.	Nature of Transaction	Existing Requirement	New Requirement
1.	Immovable Property	Sale/ purchase valued at Rs.5,00,000 lakh or more	Sale/ purchase exceeding Rs.10,00,000 lakh; 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	Deposits with Co-op banks, Post Office, Nidhi, NBFC companies will also need PAN; 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	Basic Savings Bank Deposit Account excluded (no PAN requirement for opening these accounts); 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	Opening a demat account; 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.