From 1st January, 2016, quoting of the income tax Permanent Account Number or PAN would be mandatory for certain transactions where it exceed a specified limit.
Persons who do not hold the income tax Permanent Account Number or PAN are required to fill a form and furnish any one of the specified documents to establish their identity.
As per the new rule, quoting of PAN will be required for transactions of an amount exceeding 2 lakh rupees regardless of the mode of payment.
Government has also enhanced the monetary limits of certain specified transactions which require quoting of PAN.
Now in India, you are required to quote PAN for sale or purchase of immovable property if the value of such property is Rs. 10 lakh or more. Earlier, this limit was Rs. 5 lakh.
In the case of hotel or restaurant bills paid at any one time, the limit has been increased from Rs. 25,000 to Rs 50,000.
With effect from 1st January 2016, requirement of PAN applies to opening of all bank accounts including in co-operative banks. However, opening of a no-frills bank account such as a Jan Dhan Account will not require PAN.
As per the new provisions in following two transactions you are not required to quote PAN;
- Installation of telephone/ cell phone connections
- Deposit with Post Office Savings Bank
Here is a chart highlighting the key changes to Rule 114B of the Income-tax Act;
NATURE OF TRANSACTION
MANDATORY QUOTING OF PAN (RULE 114B)
|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.|