New Delhi : The Central Board of Direct Taxes (CBDT) has expanded the requirement of Permanent Account Number (PAN), an identification number issued by the tax authority, for more transactions in an effort to closely monitor economic activity.
Accordingly, cash deposits or withdrawals exceed 20 lakhs in one or more bank accounts or post offices in a financial year will require the PAN or Aadhaar number to be quoted. The limit of 20 lakhs is for the sum of all deposits or all withdrawals in a year. This requirement also covers deposits and withdrawals from co-operative banks.
Further, as per the Income Tax (Fifteenth Amendment) rules notified on Tuesday, PAN is required to be mentioned for opening a current account or cash credit account by a person in a bank or post office.
The notification also states that any person who intends to do these transactions should apply for PAN at least seven days before the date on which the transaction is intended to take place.
Already, PAN is required to be quoted on bank deposits of more than On many other transactions like payments of 50,000 and above made in a day 50,000 for purchase of mutual funds, debentures, foreign exchange and settlement of hotel bills at any point of time.
annual limit of 20 lakh deposit or withdrawal shows that one cannot breach this limit without quoting PAN, which is a lot of small deposits below the daily limit. 50,000 without PAN.
The expansion of use of PAN indicates the increasing monitoring of economic activities by the Income Tax Department in the country. This enables officials to assess whether the spending patterns of individuals and entities as well as their assets match their reported income.
Already, the tax department provides a list of third party reported transactions to the taxpayer so that the assessee does not miss out on any income while filing his tax return.
According to Mitesh Jain, partner at law firm Economic Laws Practice, the new rules will provide additional data points to tax officials and such transactions may be reflected in the ‘Insights’ portal. Project Insights is an integrated data warehousing and business intelligence platform of the Income Tax Department to encourage voluntary compliance and prevent non-compliance.
“This notification has expanded the reporting and compliance framework for taxpayers and increased information monitoring by tax authorities,” Jain said.
The new rules put the onus of ensuring compliance on both the depositors as well as the receiving banks, co-operative banks and post master generals.