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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