Modi mandates PAN number to curb black money

 

This New Year, Government is to take resolution to curb out the black money. To track the circulation of money, the Government has modified the rules regarding quoting of PAN for specified transactions. Modi mandates PAN number to curb black money.

To collect information of 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.

 

Such a move will bring all high-value household purchases like high-end electronic gadgets, foreign holidays booked through tour packages, luxury items like expensive watches and gold jewellery purchases under the lens of the taxmen.

 

In 2015-16 Budget, the Finance Minister had proposed making quoting of Permanent Account Number (PAN) mandatory for all sale and purchase of over Rs 100,000.

 

With coming of this notification, now, you will have to flash your PAN for any transaction of over Rs 2 lakh regardless of mode of payment. This shall give effect to the budget proposal intended to check domestic black money.

 

Also, in regard to opening of all bank accounts except Pradhan Mantri Jan Dhan Yojana, quoting of PAN will be mandatory from January 1. In keeping with the government’s thrust on financial inclusion, opening of a no-frills bank account such as a Jan Dhan account will not require PAN. Other than that, the requirement of PAN applies to opening of all bank accounts including in co-operative banks.

 

It has been highlighted that purchasing of jewellery or bullion is a major source of black money. Thus, quoting of PAN would be required if the sum involved is Rs 2 lakh per transaction. Currently, it is required for transaction of Rs 5 lakh and above.

 

Apart from this, the government has also announced certain relaxations in monetary limits for quoting PAN in certain transactions to “bring a balance between the burden of compliance on legitimate transactions and the need to capture information relating to transactions of higher value”.

 

The monetary limits for quoting PAN has raised to Rs 10 lakh from Rs. 5 lakh for sale or purchase of immovable property. Similarly, limit has been raised to Rs 50,000 from Rs 25,000 in the case of settling one time hotel or restaurant bills and to Rs 1 lakh from Rs 50,000 for purchase or sale of shares of an unlisted company. A distinction has been made in case of hotel and foreign travel bills of Rs 50,000 as they are luxury spending.

 

Quoting PAN will help create an audit trail of all high-value transactions by one particular individual and help the tax department determine if it is in line with the declared income of that person.

 

The above changes in the rules are expected to be useful in widening the tax net by non-intrusive methods.

The following table will give a highlight of all the changes for quoting of PAN:

 

Nature of transaction	New Requirement
Immovable Property	·         Sale/ purchase exceeding Rs.10 lakh; ·         Properties valued by Stamp Valuation authority at amount exceeding Rs.10 lakh will also need PAN.
Time Deposit	·         Deposits with Co-op banks, Post Office, Nidhi, NBFC companies will also need PAN; ·         Deposits aggregating to more than Rs.5 lakh   during the year will also need PAN
Opening an account (other than time deposit) with a banking company.	·         Basic Savings Bank Deposit Account excluded (no PAN requirement for opening these accounts); ·         Co-operative banks also to comply
Hotel/restaurant bill(s)	Cash payment exceeding Rs.50,000
Cash purchase of bank drafts/ pay orders/ banker’s cheques	Exceeding Rs.50,000 on any one day.
Cash deposit with banking company	Cash deposit exceeding Rs.50,000 in a day.
Foreign Travel	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)
Mutual Fund Units	Payment exceeding Rs.50,000 for purchase.
Shares of company	·         Opening a demat account; ·         Purchase or sale of shares of an unlisted company for an amount exceeding Rs.1 lakh per transaction.
Debentures/ bonds	Payment exceeding Rs.50,000
RBI bonds	Payment exceeding Rs.50,000
Life Insurance Premium	Payment exceeding Rs.50,000
·         Purchase of jewellery/bullion; ·         Purchases or sales of goods or services	Exceeding Rs.2 lakh per transaction
Cash cards/ prepaid instruments issued under Payment & Settlement Act	Cash payment aggregating to more than Rs.50,000 in a year.

____________________________________________________________________________________________________________