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    Dec 16, 2015

    Quoting PAN mandatory for sale of goods or services above 2 Lakhs and 18 more changes

    The Government is committed to curbing the circulation of black money and widening of tax base. To collect information of certain types of transactions from third parties in a non-intrusive manner, the Income-tax Rules require quoting of 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.

    One of the recommendations of the Special Investigation Team (SIT) on Black Money was that quoting of PAN should be made mandatory for all sales and purchases of goods and services where the payment exceeds Rs.1 lakh. Accepting this recommendation, the Finance Minister made an announcement to this effect in his Budget speech. The Government has since received numerous representations from various quarters regarding the burden of compliance this proposal would entail. Considering the representations, it has been decided that quoting of PAN will be required for transactions of an amount exceeding Rs.2 lakh regardless of the mode of payment.

    To bring a balance between burden of compliance on legitimate transactions and the need to capture information relating to transactions of higher value, the Government has also enhanced the monetary limits of certain transactions which require quoting of PAN. The monetary limits have now been raised to Rs. 10 lakh from Rs. 5 lakh for sale or purchase of immovable property, to Rs.50,000 from Rs. 25,000 in the case of hotel or restaurant bills paid at any one time, and to Rs. 1 lakh from Rs. 50,000 for purchase or sale of shares of an unlisted company. In keeping with the Government’s thrust on financial inclusion, opening of a no-frills bank account such as a Jan Dhan Account will not require PAN. Other than that, the requirement of PAN applies to opening of all bank accounts
    including in co-operative banks.

    The changes to the Rules will take effect from 1st January, 2016.

    The above changes in the rules are expected to be useful in widening the tax net by non-intrusive methods. They are also expected to help in curbing black money and move towards a cashless economy.

    A chart highlighting the key changes to Rule 114B of the Income-tax Act is attached.

    (Shefali Shah)
    Pr. CIT(OSD),
    Official Spokesperson, CBDT 

    SI.
    NATURE OF TRANSACTION
    MANDATORY QUOTING OF PAN (RULE 114B)
                                                     Existing requirement
    New requirement
    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 changes
    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
    Cash aggregating to
    Rs.50,000/- or more
    during any one day
    Exceeding Rs.50,000/- on any one day.
    10
    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)
    11
    Credit card
    Application to banking
    company/ any other
    company/institution for
    credit card
    No change.
    Co-operative banks also to comply.
    12
    Mutual fund units
    Payment of Rs.50,000/-
    or more for purchase
    Payment exceeding Rs.50,000/- for
    purchase.
    13
    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.
    14
    Debentures/ bonds
    Payment of Rs.50,000/-
    or more to a company/
    institution for acquiring
    its debentures/ bonds
    Payment exceeding Rs.50,000/-.
    15
    RBI bonds
    Payment of Rs.50,000/-
    or more to RBI for
    acquiring its bonds
    Payment exceeding Rs.50,000/-.
    16
    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.
    17
    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
    18
    Purchases or sales of goods or
    services
    No requirement
    Purchase/ sale of any goods or
    services exceeding Rs.2 lakh per transaction.
    19
    Cash cards/ prepaid
    instruments issued under
    Payment & Settlement Act
    No requirement
    Cash payment aggregating to more
    than Rs.50,000 in a year.
    20
    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.

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