Thursday 12 May 2022 7:44 AM UTC
NEW DELHI MAY 11: The Central Board of Direct Taxes (CBDT) has expanded the requirement of Permanent Account Number (PAN), the identification number issued by the tax authority, to more transactions as part of efforts at closer monitoring of economic activity, according to a Gazette Notification issued on 10th May 2022. (Scroll Down To Read The Full India Govt Gazette Notification)
As per the notification, cash deposits or withdrawals exceeding ₹20 lakh in one or more bank account or post office in a financial year would need to quote the PAN or Aadhaar number. The ₹20 lakh threshold is for the aggregate of all deposits or aggregate of all withdrawals in a year. This requirement also covers deposits and withdrawals from cooperative banks.
Earlier PAN was mandatorily required to be quoted in case of cash deposit exceeding Rs 50,000 in a single day, however, no annual aggregate limit for cash deposition was prescribed. Also, no limit was prescribed for cash withdrawal, which has also been prescribed now.
Prior to this notification, a bank official was required to ensure that individual undertaking such transactions have PAN. However, going forward, a bank official will be required to keep the PAN in bank’s records and inform the same to the Income tax department regarding such financial transactions.
Further, new rules will be applicable not only to banks but also to post offices and co-operative society. The newly inserted rules may be seen as a step the government towards spreading its arms in tracking the cash deposits/withdrawals to combat the circulation of cash in the economy.
The said Rules shall be applicable from May 26, 2022, and hence every person who intends to undertake afore-stated transactions should obtain the PAN, otherwise, such person would not be able to perform afore-stated transactions. Since the rules are applicable from May 26, 2022, CBDT may need to clarify whether the transactions are undertaken prior to May 26, 2022, shall be considered for computing the aggregate value of INR 20 lakhs for this financial year or not.
In addition, opening of a current account or cash credit account by a person with a bank or post office needs to quote PAN, according to Income–tax (Fifteenth Amendment) Rules notified on Tuesday.
The notification also says that any person who intends to make these transactions should apply for a PAN at least seven days before the date on which the transaction is intended to be made.
Already, there is a requirement for quoting PAN on bank deposits of over ₹50,000 made in one day and on a host of other transactions like payment of over ₹50,000 for purchase of mutual funds, debentures, foreign exchange and for settling hotel bills at any one time.
The annual threshold of ₹20 lakh deposit or withdrawal suggests that one cannot breach this threshold without quoting PAN by making too many smaller deposits below the daily threshold of ₹50,000 without PAN.
The expansion of the use of PAN signals the income tax department’s increased monitoring of economic activity in the country. This enables the authorities to assess whether the spending pattern of individuals and entities as well as their assets match with their reported income.
The new rules also put the onus of ensuring compliance on both the persons who make deposits as well as on the recipient—banks, cooperative banks and the Post Master General.
A non-resident Indian (‘NRI’) can apply for PAN by submitting the Form No. 49A along with the requisite documents and prescribed fees at the PAN application center of UTIITSL or NSDL. He can also make an online application through the website of UTIITSL or NSDL.
UTI and NSDL both provide PAN card services in India. There is no major difference between the two. Both UTI and NSDL work under the Income Tax Department of India.
Even if you are a foreign citizen who wants to apply for a PAN card in India, you will have to start by filling out the form. You can visit the TIN-NSDL website and fill out form 49AA. Individuals who have foreign nationalities, OCI holders and PIOs need to use this form to get a PAN Card.
New rules will be applicable from May 26.
NEW INCOME TAX RULES
The government said that the measure is in sync with the policy to reduce the use of cash for transactions and the push for digital modes.
The CBDT notified amendments in the Income Tax Rules, 1962 prescribing new transactions for obtaining and quoting PAN.
The notification says, “the term transactions include deposit/withdrawal of cash amounting to Rs 20 lakh or more in a financial year through one or more bank accounts. Account(s) with not just commercial bank but even co-operative bank or post offices.”
In the Budget for 2020, the Finance Ministry had introduced Tax Deducted at Source (TDS) on cash withdrawal in excess of Rs 20 lakh and this amendment to the rule has been added for specific transactions.
With this, the government has put the onus of quoting the PAN and Aadhar details at the time of initiating a transaction both on the customer and financial institutions, which include a bank, co-operative bank and a post office .
Sources say that the government will also come out with SOPs for the authentication of the PAN and Aadhaar.
With this, there is yet another filter in place to ensure that everyone who operates a bank account gets a PAN to make cash transactions of Rs 20 lakh or more.
Interestingly, banks and other financial institutions now await a clarification from the government about how to deal with the rule in future as far as transactions made prior to May 26, 2022 deadline are concerned, since the financial year started in April.
CLICK TO FOLLOW UKMALAYALEE.COM