Cases in which submission of PAN is mandatory

Hello, in this post we have made a compiled list of various scenarios where PAN is mandatory. 

Introduction

To restrain the circulation of black money and to increase the tax base, the government has recently updated the conditions for which PAN details are mandatory. This will be applicable for transactions which exceed a certain specified limit.

These changes came into effect as per the Special Investigation Team (SIT). SIT made PAN details mandatory for all sale or purchase of goods and services which exceed 1 lakh.

If you do not have a PAN then you need to fill out a form to establish your identity.

List of transactions in which quoting PAN is mandatory

The table below highlights the transactions for which PAN is made mandatory as per Rule 114B of the Income Tax Act.

SL.No. Nature of Transactions Value of Transactions
1. Sale or purchase of a motor vehicle (not two-wheeler) All such transactions
2. Opening an account [other than a time-deposit and a Basic Savings Bank Deposit Account] with a bank/ co-operative bank All such transactions
3. Making an application to a bank/co-operative bank/ other company or institution, to issue a credit/debit card All such transactions
4. Opening of a Demat account All such transactions
5. Bill payment in hotel/restaurant at any one time Payment in cash of an amount exceeding Rs. 50,000
6. Payment made to travel in any foreign country or purchase of any foreign currency at any one time. Payment made in cash which exceeds 50,000.
7. Payment to purchase the units of a Mutual Fund Amount exceeding Rs. 50,000
8. Payment to a company or an institution to acquire their debentures/bonds Amount exceeding Rs. 50,000
9. Payment to the RBI to acquire their bonds Amount exceeding Rs. 50,000
10. Deposit with a bank/co-operative bank or Post Office Cash deposit exceeds 50,000 in a day or exceeds Rs. 2,50,000 during November 9, 2016, and December 30, 2016
11. Purchase of bank drafts/pay orders/banker’s cheques from a bank/co-operative bank  If the payment amount is over 50,000 in a day
12. A time deposit with bank/co-operative bank/post office/Nidhi/non-banking financial company If the amount is above 50,000 or aggregate is more than 5 lakh in an FY.
13. Payment for one or more pre-paid payment instruments issued by RBI to a bank/co-operative bank/any other company or institution Payment in cash or by bank draft/pay order/banker’s cheque of an amount aggregating to more than 50,000 in an FY
14. Payment as life insurance premium to an insurer The aggregate amount is more than 50,000 in an FY
15. A contract for sale or purchase of securities (other than shares) Amount exceeds 1 lakh per transaction
16. Sale/purchase, by any person, of shares in a company not listed in a recognised stock exchange If the amount exceeds1 lakh per transaction
17. Sale/ purchase of any immovable property Amount exceeding 10 lakh or valued by stamp valuation authority referred to in Section 50C at an amount exceeding 10 lakh
18. Sale/ purchase, by any person, of goods or services of any nature other than those specified at Sl. Nos. 1 to 17 above Amount exceeding Rs. 2 lakh per transaction

Key Notes:

  • Where a person doing the transaction is a minor and does not have chargeable income then he can use his father or mother or guardian’s PAN.
  • Any person doing transaction does not have a PAN, he should file Form No.60. So, the transaction details are in paper form or electronically under EVC. It is according to procedures, data structures and standards specified by the Principal Director General of Income Tax (Systems) or Director General of Income Tax (Systems).
  • This provision is not applicable to the following:
  1. The Central Government, the State Governments and the Consular Offices;
  2. The non-residents referred in clause (30) of Section 2.
  • When a person has an account (not time deposit and basic Saving account) in banking company / cooperative bank to which the Banking Regulation Act applies and not submit his PAN or Form No. 60 needs to provide it on or before February 28th 2017.
  • “payment in connection with travel” – payment made for fare, travel agent/tour operator, or to an authorised person as in clause (c) of Section 2 of the Foreign Exchange Management Act, 1999.
  • “travel agent or tour operator” -the person who arranges for air, surface or sea travel /provides services like accommodation, tours, entertainment, passport, visa, foreign exchange, travel-related insurance or other services either out or in of tour package;
  • “time deposit” means a deposit repayable after a fixed period expires.

With that, we have come to an end of this post on cases where PAN is made mandatory. Share your views and opinions with us in the comments section below.

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