PAN (Permanent Account Number) is a 10 digit alphanumeric number, issued by the Income Tax Department, in a card form. It enables the Income Tax Department to link all transactions of the person with the Department and thereby acts as an identity of the person. PAN is required to be quoted at the time of making tax payments, for deduction of tax as well as filing of returns. Now the requirement of quoting PAN has been extended in many other situations.
With effect from 1 January, 2016, the Central Board of Direct Taxes has amended the rules regarding reporting of PAN with respect to specified transactions, to keep a check on tax evasion and curb the circulation of black money. Quoting of PAN does not apply to Central Government, State Government, Consular Offices and certain transactions of the Non-residents. In case where the person entering into such transactions is a Minor not having any taxable income, the person is required to quote PAN of his father or mother or guardian in the relevant document. Where the person entering into such transactions does not have PAN, then such person shall make a declaration in Form No 60, giving therein the particulars of such transaction.
TRANSACTIONS REQUIRING QUOTING OF PAN (WEF 1ST JAN 2016)
Every person to quote PAN in all documents pertaining to transactions specified, if amount exceeds limit mentioned:
1. Sale or purchase of motor vehicles other than two wheelers.
2. Opening a new Bank account including in Co-Operative Bank.
3. Making application for issue of Credit or Debit card.
4. Opening Demat account for shares and other securities transactions.
5. Payment at any time of hotel or restaurant bills by cash in excess of Rs 50,000.
6. Payment in cash for foreign travel or for purchase of foreign currency in excess of Rs 50,000.
7. Purchase of Mutual fund units, in excess of Rs 50,000
8. Payment to company or an institution for acquiring debentures or bonds exceeding Rs 50,000
9. Payment to RBI for acquiring bonds exceeding Rs 50,000
10. Deposits in cash exceeding Rs 50,000 on any one day with any bank including co-operative bank.
11. Purchase of bank draft or bankers cheques in cash from any bank including co-operative bank in excess of Rs 50,000 on any one day.
12. Time deposit with any bank including Co-operative bank, Post office, Nidhi, NBFC companies in excess of Rs 50,000 or aggregating more than Rs 5 lakh during financial year.
13. Payment for prepaid payment instruments in excess of Rs 50,000 in a financial year.
14. Payment of life insurance premia aggregating Rs 50,000 in a year.
15. Contract for sale or purchase of securities (other than shares) in excess of Rs 1 lakh per transaction.
16. Purchase or sale of unlisted shares in excess of Rs 1 lakh per transaction.
17. Sale or purchase of any immovable property or properties of amount exceeding Rs 10 lakh valued by stamp valuation authority in excess of Rs 10 lakh.
18. Sale or purchase of any goods or services in excess of Rs 2 lakh per transaction.
. Any person who does not have a PAN shall make a declaration in Form No 60.
. Any person who has received any document shall ensure after verification, that PAN has been duly and correctly mentioned or declaration in Form 60 has been duly furnished with complete particulars.
. Specified person who has received any declaration in Form No 60 shall-
u e-furnish a statement in Form No 61 containing particulars of such declaration to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation)
. Retain Form No 60 for a period of six years from the end of the financial year in which the transaction was undertaken.
. Where the declarations are received by the September 30, furnish statement by October 31 of that year; and where the declarations are received by the March 31, furnish statement by April 30 of the financial year immediately following the financial year in which the form is received.
List of transactions & persons required to report financial transaction in Form 61A has been provided in Rule 114E of Income Tax Rules. The return in Form No 61A shall be e-furnished to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation) on or before the May 31, immediately following the financial year in which the transaction is registered or recorded.
Example of transactions for which Form 61A will have to be furnished:
a. Company or Institution in receipt of an amount aggregating to Rs 10 lakh or more from any person in a financial year for acquiring bonds or debentures.
b. Company in receipt of an amount aggregating to Rs 10 lakh or more from any person in a financial year for acquiring shares (including share application money).
c. Any person who is liable for audit u/s 44AB and in receipt of cash payment exceeding two lakh rupees for sale of goods or services.
Consequences of not having/quoting PAN
If you do not furnish PAN, then tax is deducted at a much higher rate. For instance, if the annual interest you earn on your bank fixed deposits is at least Rs 10,000, then banks deduct tax at source before crediting the interest to your account. Tax will be deducted at 10% if you produce PAN but flat 20% or higher if you do not provide PAN. Further, there is penalty U/s 272B for non-quoting of PAN of an amount Rs 10,000.
PAN enables Intelligence Wing of the Tax Department to have complete information about each and every tax payer in India; details of transactions of his all bank accounts, mutual funds, DEMAT accounts, investments, jewellery, real estate & vehicle purchases, foreign travels, luxury hotel stay, on-line purchases etc. By just clicking on your PAN, your entire history will be revealed and cross examined with the tax return filed by you. It is therefore advisable to record entries of these transactions in your books of accounts supported by documentary evidence showing source of funds to have peace of mind and happiness.
