PAN made mandatory for all transactions above Rs2 lakh

The government has made quoting of PAN mandatory for cash payment made to settle hotel bills or for buying foreign travel tickets of Rs50,000 as part of the government's ongoing efforts to check generation of domestic black money.

Beginning 1 January, quoting PAN will be mandatory for all transactions of an amount exceeding Rs2 lakh regardless of the mode of payment, revenue secretary Hasmukh Adhia said on Tuesday.

The new norms are based on the recommendations of the Special Investigation Team (SIT) on Black Money that quoting of PAN should be made mandatory for all sales and purchases of goods and services where the payment exceeds Rs1 lakh.

While the finance minister made an announcement on the acceptance of the recommendations, the government said in order to bring a balance between the burden of compliance on legitimate transactions and the need to capture information relating to transactions of higher value, it decided to keep the base at a higher level.

The PAN requirement for all non-luxury cash transactions will be Rs2 lakh. Currently, it is required for transaction of Rs5 lakh and above.

PAN will also be mandatory on purchase of immovable property of Rs10 lakh.

The monetary limits have now been raised to Rs 10 lakh from Rs5 lakh for sale or purchase of immovable property, to Rs50,000 from Rs25,000 in the case of hotel or restaurant bills paid at any one time, and to Rs1 lakh from Rs50,000 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. The requirement of furnishing PAN for making deposits of over Rs50,000 in post office saving accounts has also been dispensed with.

Other than that, the requirement of PAN applies to opening of all bank accounts including in co-operative banks.

These 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 finance ministry release stated.


Key changes to Rule 114B of the Income-tax Act.
Sl.
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 change
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
Amount aggregating to Rs.50,000 or more during any one day
Cash payment exceeding Rs.50,000/-.
10
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.
11
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)
12
Credit card
Application to banking company/ any other company/institution for credit card
No change.

Co-operative banks also to comply.

13
Mutual fund units
Payment of Rs.50,000 or more for purchase
Payment exceeding Rs.50,000 for purchase.
14
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.

15
Debentures/ bonds
Payment of Rs.50,000 or more to a company/ institution for acquiring its debentures/ bonds
Payment exceeding Rs.50,000.
16
RBI bonds
Payment of Rs.50,000 or more to RBI for acquiring its bonds
Payment exceeding Rs.50,000.
17
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.
18
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
19
Purchases or sales of goods or services
No requirement
Purchase/ sale of any goods or services exceeding Rs.2 lakh per transaction.
20
Cash cards/ prepaid instruments issued under Payment & Settlement Act
No requirement
Cash payment aggregating to more than Rs.50,000 in a year.