The Permanent Account Number (PAN) is a must for most of the financial transaction. The government has issued new guidelines in order to curb circulation of black money and widening of tax base, for which quoting PAN is necessary.
The government has also enhanced the monetary limits of certain transactions which require quoting of PAN. The changes to the Rules will take effect from 1st January, 2016.
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.
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|Sl.||NATURE OF TRANSACTION||MANDATORY QUOTING OF PAN (RULE 114B)|
|Existing requirement||New requirement|
|1.||Immovable property||Sale or 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||Cash payment in connection with foreign travel or purchase of foreign currency of an amount exceeding Rs.50,000/- at any one time|
|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||No change|
|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.|
It's important to note that almost every high value transaction, including spending money at restaurants, will need a PAN number. If you do not have a PAN number, you have to fill up the form for identification.
It's important to inform our readers that you must apply for a PAN, even though you may not be in the taxable income bracket. The government is increasingly looking at curbing black money and a good way to start is to get people to quote their PAN numbers.