One of the most important documents that every individual in India will need to possess is a PAN card. This PAN or Permanent Account Number is issued to citizens by the Income Tax Department of India under the supervision of Central Board of Direct Tax. This number is a 10 digit alphanumeric identity allotted to a taxpayer and also acts as a proof of identity. A PAN number keeps a record of all transactions of the individual under one database. The government has also made it mandatory for the PAN number to be quoted in transactions that are higher than a certain amount. Through a PAN number, the government can keep a track of every individual’s transactions and financial behavior.
In order to curb the use of black money and monetary fraud, the government has put in place a number of measures. There is a limit imposed on transactions that be undertaken without quoting a PAN number. For the purchase and sale of immovable property, the monetary limit is Rs.10,00,00 and for restaurant and hotel bills, the limit is Rs.50,000. Beyond this amount, the PAN number of the individual must be quoted. Also, in case individuals wish to deal with cash transactions of over Rs.2,00,00. False or failure to declare these details could result in imprisonment and hefty fines for the said individual.
Rules 114B to 114E of Income Tax Rules of 1962
This rule deals with transactions which require individuals to quote their PAN number in all documents for clause (c) of sub-section (5) of section 139A. According to this rule, every individual will have to quote his/her permanent account number in all documents that deal with transactions Purchase or sale of a motor vehicle or vehicle other than vehicles that are two wheeled, Opening account other than a fixed-deposit and Basic Savings Bank Deposit Account with a co-operative bank or banking company etc.
Know more the 114B rule deals with transactions here: Rule 114B
The provisions of these rules are as follows
Any individual being
- An Inspector-General or registering officer who has been appointed under the Registration Act of 1908 (16 of 1908)
- An individual who sells motor vehicle or immovable property
- An officer or manager of a banking company or co-operative bank, as is the case, referred to at Sl.no. 2 or Sl.no. 3 or Sl.no. 10 or Sl.no. 11 or Sl.no. 12 or Sl.no. 13 of Rule 114B
- Post master
- Sub-broker, stockbroker, banker to an issue, share transfer agent, trustee of a trust deed, merchant banker, registrar to issue, underwriter, merchant banker, portfolio manager, investment adviser and other intermediaries who have registered under sub-section (1) section 12 of the Securities and Exchange Board of India Act of 1992 (15 of 1992).
- A participant, depository, custodian of securities or another person registered under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) referred to at Sl. no. 4 of Rule 114B.
- Principal officer of a company referred to at Sl.no. 3 or Sl.no. 4 or Sl.no. 8 or Sl.no. 12 or Sl.no. 13 or Sl.no. 15 or Sl.no. 16 of Rule 114B
- Principal officer of an institution referred to at Sl.no. 2 or Sl.no. 3 or Sl.no. 8 or Sl.no. 10 or Sl.no. 11 or Sl.no. 12 or Sl.no.13 of Rule 114B
- A trustee or another person who was duly authorised by the trustee of a Mutual Fund referred to at Sl.no. 7 of Rule 114B
- An officer of the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act of 1934 (2 of 1934), or of an agency bank that has been authorised by the Reserve Bank of India
- An officer or manager of an insurer referred to at Sl.no. 14 of Rule 114B
- who , regarding a transaction specified in Rule 114B has received a document shall ensure after verification that PAN or permanent account number has been correctly and duly mentioned or as the case may be, a declaration in Form 60 that has been duly furnished with all particulars.
- Any individual, being a person raising bills referred to at Sl.no.5 or Sl.no.6 or Sl.no.8 of Rule 114B, who, in relation to a transaction that has been specified in the said serial numbers, has issued a document will ensure post verification that, permanent account number has been provided correctly and the same should be mentioned in such document or as the case may be, a declaration in Form 60 has been duly provided with all particulars.
This rule refers to the manner and time in which individuals referred to in Rule 114C will have to furnish a statement that contain particulars of Form 60.
Every individual referred to in [clauses (a) ] to (k) of sub-rule (1) of Rule 114C, and sub-rule (2) of rule 114C and who has to get his/her accounts audited under section 44AB of the Act.
- who has received a declaration in Form No.60, on or after January 1, 2016, regarding a transaction specified in Rule 114B, will have to Provide a statement in Form No. 61 that contain particulars of such a declaration to the Director of Income tax (Intelligence and Criminal Investigation) or the Joint Director of Income tax (Intelligence and Criminal Investigation) through online electronic data transmission to a server that is designated for this purpose and procure an acknowledgment number for the same, and Retain Form No.60 for 6 years from the end of the said financial year in which transaction had taken place.
- Statement that was referred to in clause (i) of sub-rule (1) will have to Be furnished prior to October 31st of that year in case declarations were received by the September 30th.
- Be furnished before April 30th of the financial year that immediately follows the financial year in which the form was received, if declarations were received prior to March 31.
- Statement referred to in clause (i) of sub-rule (1) will have to be verified In case individual who is furnishing the statement is an assessee as defined in clause (7) of section 2 of the Act, by an individual specified in section 140 of the said Act In other cases, by the individual referred to in Rule 114C.
- The Principal Director General of Income tax (systems) or Director General of Income tax (Systems) will specify the procedures, standards and data structures for ensuring secure capture and transmission of data, evolving and implementing appropriate security, retrieval and archival policies regarding statement referred to in subclause (i) of sub-rule (1).
Financial transaction statement that needs to be furnished under subsection (1) of section 285BA of the Act shall be furnished with respect to a financial year in Form No.61A and it shall be verified in the manner that has been indicated herein. Financial Transaction such as Cash payment made for the purchase of pay orders, bank drafts, and banker’s cheque of an amount that aggregates to Rs.10 lakh or more in one financial year. To know more about the rule check here: Rule 114E
- In case of a reporting individual, being a Postmaster General or an Inspector General or a Registrar referred to in sub-rule (2), the said return in Form 61A may be provided in a computer readable media, being a DVD or Compact Disc, along with necessary verification in Form-V on paper.
Digital signature in the above rule means a digital signature that has been issued by a Certifying Authority authorised to provide such certificates by the Controller of Certifying Authorities.
- All data structures, procedures shall be specified by the Principal Director General of Income-tax (Systems) to ensure a secure transmission and capture of data, implementing and evolving appropriate archival, security and retrieval policies.
- An officer may be designated by the Board as information Statement Administrator, not below rank of a Joint Director of Income-tax for the purpose of day to day administration regarding the furnishing of statements or returns.
- Statement of financial transactions referred to in sub-rule (1) shall be given on or prior to May 31, post financial year in which transaction was recorded or registered. As long as the statement of financial transaction in respect of transactions provided in Number 12 of Table under sub-rule (2), shall be given on or prior of January 31, 2017.
- Every reporting individual mentioned in column (3) of Table under sub-rule (2) will have to communicate to the Principal Director General of Income-tax (Systems) the name, designation, telephone number and address of the Designated Director and Principal Officer and avail a registration number.
It will be the duty of every individual specified in column (3) of Table under sub-rule (2), its Designated Director, Principal Officer and employees to observe the process and manner of maintaining information as specified by its regulator and ensure that compliance with all regulation that have been imposed under section 285BA of the Act and rules 114B to 114D and this rule, is maintained.
Designated Director refers to an individual who has been designated by the reporting individual to ensure that overall compliance with obligations imposed under section 285BA of the Act and 114B to 114D and this rule, and this includes -
- Full-time Director or a Managing Director as defined in the Companies Act, 2013 (18 of 2013), who has been duly authorised by the Board of Directors in case the reporting individual is a company,
- Reporting individual or managing partner is a partnership firm,
- Proprietor of the reporting individual is a proprietorship concern,
- Managing trustee in case the reporting individual is a trust,
- Individual or person, as is the case, who controls and manages the affairs of the reporting entity, if the reporting individual is, an unincorporated association or, another person or body of individuals.
- Principal Officer refers to an officer who has been designated by the reporting individual referred to in the Table under sub-rule (2).
- Regulator refers to an individual or a Government or an authority who is vested with the power to authorise, register, license, regulate or supervise the activity of the reporting person referred to in Table in sub-rule (2).
- Designated Director refers to an individual who has been designated by the reporting individual to ensure that overall compliance with obligations imposed under section 285BA of the Act and 114B to 114D and this rule, and this includes -
- The Statement of financial transaction that has been referred to in sub-rule (1) shall be signed, verified and furnished by the Designated Director specified in sub-rule (6) -
- Where a reporting individual is a non-resident, the statement may be verified, signed and furnished by an individual who holds a valid power of attorney from such a Designated Director.
- Rules 114B to 114E are rules that go into specifics of all transactions that require a PAN card. These rules talk about all the nitty-gritties that individuals will have to be aware of, prior to participating in transactions. With demonetisation and tougher financial rules coming into play, individuals are expected to use money judiciously and without going against the law.