PAN will also be required for opening of current and cash credit account
The Central Board of Direct Taxes (CBDT) issued a notification on May 10, 2022, making the furnishing of Permanent Account Number (PAN) or Aadhaar compulsory for a further set of transactions. According to the notification, a person must obtain and quote PAN when he enters into any of the following three transactions:
High-value cash deposit: Cash deposit (or deposits) aggregating to Rs 20 lakh or more in a financial year, in one or more accounts of a person, with a banking company, a co-operative bank, or a post office will require PAN to be furnished.
High-value cash withdrawal: The same applies to cash withdrawal or withdrawals aggregating to Rs 20 lakh or more in a financial year, in one or more accounts of a person with a banking company, a co-operative bank, or a post office.
Rahul Singh, manager, Taxmann, says, “Note that the limit of Rs 20 lakh is for deposit as well as for withdrawal. Deposit and withdrawal are not to be clubbed.” In other words, there is a separate Rs 20 lakh limit for deposits, and a separate Rs 20 lakh limit for withdrawals.
Singh adds, “If a person has maintained one or more accounts with a bank, then the deposits or withdrawals from each such account shall be taken into consideration while calculating the limit of Rs 20 lakh.”
Sameer Jain, managing partner, PSL Advocates & Solicitors, says, “Making the submission of PAN or Aadhaar card details mandatory for undertaking such transactions will ensure that the taxman is aware of them and there is no leakage of tax revenue.”
Dhaval Selwadia, partner, NA Shah Associates, adds, “This measure will enhance transparency by helping the government keep a closer tab on, and curb, cash transactions.”
Opening of current and cash credit accounts: The third transaction that will also require PAN or Aadhaar number to be furnished is opening of a current account or cash credit account by a person with a banking company, co-operative bank or a post office.
Time limit for applying to obtain PAN: In addition, another change that has been introduced is that CBDT has amended Rule 114 to introduce a time limit for applying for a PAN in case of a person who intends to enter into the transactions referred to in Rule 114BA (high-value cash deposit, withdrawal, or opening of account).
Singh says, “Such a person will have to apply for the allotment of PAN at least seven days before the date on which he intends to enter into such a transaction.”
Section 139A of the Income-Tax (I-T) Act prescribes certain transactions for which it is mandatory to provide PAN. Rule 114 provides the manner and timelines for applying for the allotment of a PAN (for a person to whom Section 139A applies).
Now, CBDT has introduced two new rules — 114BA and 114BB. Rule 114BA lists the three new transactions for which PAN will be required. Rule 114BB says PAN will be required for the transactions listed in Rule 114BA.
Rule 114BA will apply from May 25, 2022 while Rule 114BB will apply from July 9, 2022.