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The Government is committed to curbing the circulation of black money and widening of tax base. 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. Persons who do not hold PAN are required to fill a form and furnish any one of the specified documents to establish their identity.

Accepting the recommendations of the special investigation team on black money, finance minister Arun Jaitley had in the 2015-16 Budget proposed to make PAN details mandatory for all sale and purchase of Rs 1 lakh and above. However, it met with resistance from trade and industry associations that argued the lower limit would affect business.

“The government has received numerous representations from various quarters regarding the burden of compliance this proposal will entail. Considering the representations, PAN will be required for transactions of an amount exceeding Rs 2 lakh regardless of the mode of payment," Central Board of Direct Taxes (CBDT) said in a statement.

Besides, the ministry rationalised monetary limits for certain transactions requiring mandatory quoting of PAN. The monetary limits for sale or purchase of immovable property has been raised from Rs 5 lakh to Rs 10 lakh, and that for hotel / restaurant bills raised from Rs 25,000 to Rs 50,000. Sale or purchase of shares of an unlisted company has been raised from Rs 50,000 to Rs 1 lakh.

In line with the government's thrust on financial inclusion, opening of a no-frills bank account such as Jan Dhan will not require PAN. The requirement of PAN applies to opening of all bank accounts including in co-operative banks.

Installation of cellphone and telephone connections will not require quotation of PAN anymore.

Here is the list of transactions where quoting of PAN has been mandatory from Jan 1, 2016

 


Sl.

NATURE OF TRANSACTION

MANDATORY QUOTING OF PAN (RULE 114B)

Existing requirement

New requirement

1.

Immovable property

Sale/ purchase valued at Rs.5  lakh or more

i.       Sale/ purchase exceeding Rs.10 lakh;

ii.     Properties valued by Stamp Valuation authority at amount exceeding Rs.10 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

i.      Deposits with Co-op banks, Post Office, Nidhi, NBFC companies will also need PAN;

ii.    Deposits aggregating to more than Rs.5 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 lakh

No change

6.

Opening an account (other than time deposit) with a banking company.

All new accounts.

i. Basic Savings Bank Deposit Account excluded (no PAN requirement for opening these accounts);

ii. Co-operative banks also to comply

7.

Installation of telephone/ cellphone 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

i.      Opening a demat account;

ii.    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 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 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.

The author is a Chartered Accountant and can also be reached at gagandeepsingh435@gmail.com

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