PAN, or permanent account number, is a unique 10-digit alphanumeric identity by the Income Tax Department, under the aegis of Central Board of Direct Taxes. It is mandatory that every individual who falls in the tax slab should have a PAN card. This document also doubles up as an identity proof. It is essential for taxable salary, professional fees, purchasing mutual funds, assets above specified limits, and other monetary transactions.
Changes in PAN Card Transactions
The government of India had introduced certain changes in the PAN card transactions. These changes are applicable during different financial transactions, above Rs 2 lakh and is effective from January 01, 2016. Here are the objectives due to which changes have been introduced:
- Curb black money flow
Illegal transactions and corruption leads to accumulation of black money, which slows down the economy. By asking people to submit PAN for transactions above Rs 50,000, the government intends to curb illegal ways and reduce the flow of black money.
- Widen taxpayer base
It is really surprising to notice that presently only 14% of the population in India holds a PAN card. 3.6 crore people (i.e. only 2.8%) file income tax returns out of 117 crore. By asking for PAN cards, the Government can not only enhance the taxpayer base but also monitor high value transactions.
The main objective of PAN is to use it as a universal identification key to track financial transactions having a taxable component to prevent tax evasion. As per the government regulations, PAN details should be furnished for transactions above Rs 2 lakh, irrespective of the payment method. Individuals who don’t own a PAN and have transactions exceeding Rs 2 lakh should fill a form and provide the required identity proof.
Commencing from Jan 01, 2016, the PAN card has to be furnished during the following transactions:
- Immovable property – Purchase and sales of immovable property exceeding Rs 10 lakh requires a PAN card. The previous limit was Rs 5 lakh, which has now been increased to Rs 10 lakh.. Any of the properties that is valued by Stamp Valuation authority and exceeds Rs 10 lakh needs PAN card during transaction.
- Motor vehicle – When purchasing a four wheeler, the individual will have to produce a PAN card. A person selling his four-wheeler is also required to show his PAN for the transaction. However, PAN is not needed for the sale or purchase of two-wheelers.
- Fixed Deposit – Fixed deposits with any bank that are more than Rs 50,000 or Rs 5 lakh in a year are supposed to be backed with a PAN card. This rule also applies for term deposits with non-banking financial corporations (NBFCs) and Post Offices
- Opening an account – When opening an account with any of the banks, be it nationalized or co-operative, an individual has to produce his PAN as one of the documents for identification. Only accounts in Pradhan Mantri Dhan Yojana are exempted from producing the PAN.
- Life insurance premiums – Life insurance premiums may vary on the plan and premium amount, as preferred by the policyholder. Premiums may be as low as Rs 100 or high as Rs 1 lakh, depending on the insurance provider. However, in any year if the premium tends to exceed Rs 50,000, as per the new rule the policyholder will have to mention details of his PAN card.
- Cash Card – Payments made using cash cards also require PAN details. While making cash transactions through any prepaid payment instruments such as gift cards,social benefit cards or remittance cards, exceeding Rs Rs. 50,000 in a year PAN card number should be mentioned.
- Foreign travel – Quoting PAN card is mandatory for cash payments in connection with foreign travel or purchasing foreign currency of value more than Rs 50,000.
- Hotel Bill – One time bill payment of Rs 50,000 or more in cash, in any restaurant or hotel requires the payer to quote his PAN details.
- Cash purchase of bank drafts – You need to mention PAN card if you are doing cash purchase of bank drafts/ pay orders or banker’s cheques exceeding Rs 50,000 on any day.
- Cash Deposit – Quoting PAN is essential while making transaction or cash deposits worth Rs 50,000 or more in a single day in any bank account.
- Credit Card – It is mandatory to quote PAN card number while applying for credit card at any bank or financial institution.
- Purchase of bullion or jewellery – With effect from January 01, 2016, the finance ministry announced that purchase of gold jewellery or bullion worth Rs 2 lakh or more in cash or through card, furnishing PAN is a must.
- Mutual fund or Bond Purchase – PAN has to be mentioned if bonds or mutual funds exceed the purchase value of Rs 50,000.
- Company shares – Opening DEMAT accounts, used for purchasing shares in a company, in banks has PAN as one of the mandatory documents. Hence an individual who wishes to purchase stocks in an unlisted company or open a DEMAT account of more than Rs 1 lakh should furnish his permanent account number.
Quoting the PAN card number is mandatory under Rule 114B of the Income Tax Department. These changes have been introduced by the Government in order to reduce black money movement and increase tax payer base in the country.
News About PAN Card for Transactions
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Wait for PAN card increases due to the increase in applications
It is mandatory to submit PAN for opening a new bank account, carrying out higher value transactions, and more. The recent demonetization announcement has shot up the number of people applying for PAN card. Individuals who want to exchange or withdraw a higher value amount need to submit their PAN card number. This has caused a surge in PAN applications. Due to a large number of people applying for PAN card, the waiting time to receive the PAN has increased. The government is working towards issuing more PAN cards each day through digitized processes.
24th February 2017
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PAN card cap should be removed, demand jewelers
After a survey report by GFMS cited that the year 2016 saw a 20% fall in the global physical demand for gold, the gold sector is anticipating Finance Minister Arun Jaitley to turn things around for it through this year's budget. The demand for gold in India was badly affected and it was recorded to be at its worst stage since the year 2003.
Roopesh George from Kerala Jewellers informs that demonetization was one of the major factors behind the decline. In the month of November, when the government announced its demonetization drive, the gold sector witnessed a steep fall. However, the demand rose a little after that but is still far from normal.
Giving out his list of expectations from the upcoming Union Budget 2017, George says that he expects the FM to reduce the import duty on gold from the 10% that it is set on at present. Also, he says that the PAN card should be made compulsory for any purchase of jewellery only over Rs.5 Lakh.
Since a majority of farmers and people from remote areas of the country don't possess PAN cards, the cap should be increased, he says. He believes that for Indian weddings Rs.2 Lakh is too low a limit.
16th February 2017
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Dealings of non-PAN users up for scrutiny
R C Mishra, member of CBDT (Central Board of Direct), stated that a list of 90 lakh individuals has been prepared who are involved in high value transactions. These include, foreign travel, use of credit cards, cash, etc. All these people on the list are non-PAN holders. They will soon face scrutiny and confrontation as a part of the exercise so that their black money is declared under the one-time window.
The discussion and awareness programme on IDS (Income Declaration Scheme) 2016 was also attended by R C Mishra at the Diamond City. He said that several cases have been reported where individuals travel to foreign countries and carry out high value transactions using their credit cards or purchase exotic cars. However, they do not pay any tax for it. These people are being watched by the department.
19th August 2016
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Purchase of Luxury Goods under IT Lens, Buyers Receive Notices
Ten days after the government hinted that purchases above Rs.7 lakhs are being scrutinized by the IT Department, all those who have purchased luxury goods have received notices such as lawyers, businessmen, doctors and so on. Individuals who purchased these items with PAN number or credit cards were also sent notices. According to experts, although certain high salaried individuals have come under scrutiny, they are not the primary targets and these notices are sent with the intention of fishing out those who use/intend to use black money.
Around 4,000 to 5,000 schemes may have been sent in the last week alone. These notices read more like an instruction for individuals to declare their assets without fail. These notices were mainly sent to those who purchased luxury goods priced above Rs.4 lakhs in or post 2013.
9th August 2016
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GJF waits for government to increase limit of PAN furnishing for purchase of gold
All India Gems and Jewellery Trade Federation is hoping that the government will consider increasing the limit for mandatory PAN card furnishing for purchase of gold worth over Rs.2 lakh. Last year, the government made it mandatory to quote PAN number in case of gold purchases which was worth more than Rs.2 lakh. GFJ is also happy about the government’s decision to hike the small scale industry exemption limit for jewellery manufacturers. More than 80% of the gems and jewellery manufacturers are likely to benefit due to a hike in the SSI limit announced by the government.
26th July 2016
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Budget Roll Back Leaves Jewellery Traders Elated
Jewellery traders had good news this week as the Union Government decided to take a U-turn on its decision to add 1% TCS on gold jewellery purchased via cash in excess of Rs.2 lacs. The threshold has been raised by the government to the Rs.5 lacs it had originally intended. The new law will take effect on the 1st of June.
The Secretary General of the Delhi Jewellers Association, Mr Ashok Kumar, recently revealed that jewellery traders were elated with the news, but were unhappy that the limit for PAN cards remained at Rs.2 lacs. Although customers would derive some benefits, it wouldn’t give them a significant boost, said Mr Kumar, adding that the purchasing power of an average customer would increase if the limit for PAN card was also raised to Rs.5 lacs.
2nd June 2016
