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 |
|
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 |
|
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 |
|
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 |
|
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.