On Friday the government has made Aadhaar and PAN mandatory for opening a bank account with effect from June 1, 2017. Further the two identities Aadhaar issued by the UIDAI and PAN issued by the Income Tax Department shall also be required for financial transactions over Rs. 50,000.
For existing bank accounts, Aadhaar has to be furnished by December 31, 2017, failing which the account shall be made inoperable. Further, from June 1, 2017, in case the individual does not have Aadhaar at the time of account opening then he needs to submit the proof of enrolment for Aadhaar within six months of account opening.
In respect of the companies opening bank account, Aadhaar number of managers or in a case where employees have been given the attorney to transact on behalf of the company have to be furnished.
For companies opening bank accounts, Aadhaar number of managers, or employees holding an attorney to transact on the company's behalf will have to be provided.The step underlines increasing use of the biometric identity by the government to curb unaccounted or unscrupulous money in the economy.
The notification comes after the government's repeated call for seeding PAN with Aadhaar to avoid individuals with multiple PAN evade tax incidence. To make the seeding process hassle free, the department of Income Tax has introduced several simple ways
Know how to link PAN with Aadhaar using a SMS facility
In respect of the financial transactions of Rs. 50,000 and above, which includes investments in fixed deposits, mutual funds and insurance, an investor will be required to furnish Aadhaar and PAN or Form 60 wef June 17, 2017. Investor category encompasses individuals, partnership firms and companies. The amendment to the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 in respect of small bank accounts says that such accounts can now be opened only at branches with CBS or Core banking solution facility. Small bank accounts could be opened without furnishing valid KYC documents and can have a maximum deposit of upto Rs. 50,000.
Also such small bank accounts can be maintained with bank branches where it is possible to manually track that no foreign remittances are being credited into the said bank account and provided limits are not being breached on a monthly or annual basis in respect of the transactions. The account shall remain operational initially for a year, however after this time, the account holder will need to provide documents to support the fact that he or she has applied for officially valid identification.
The notification further stated "The small account shall be monitored and when there is a suspicion of money laundering or financing of terrorism or other high risk scenarios, the identity of claim shall be established through the production of official valid documents".
"In case the client, eligible to be enrolled for Aadhaar and obtain a PAN... does not submit the Aadhaar number or the PAN at the time of commencement of an account-based relationship with a reporting entity, the client shall submit the same within a period of 6 months from the date of the commencement of the account based relationship.
"Provided that the clients... already having an account-based relationship with reporting entities prior to date of this notification, the client shall submit the Aadhaar number and PAN by December 31, 2017," the notification said.