Recently the government of India had made 20 PAN card changes. These PAN card changes are applicable while doing various monetary transactions in India. This change also includes a mandatory requirement of mentioning PAN card while doing financial transactions above Rs 2 Lakh. This change will be effective from 1st January, 2016. The basic objectives behind these changes are given below.
- Curb prevailing black money flow
Black money is money generated from black market on which income and other taxes have not been paid. Corruption and illegal transaction is main source of black money. It is estimated that $16.4 Trillion is deposited in swizz bank by illegal way in form of black money. By making these changes it is expected that black money flow will reduce.
- Widening Tax payer base
You must be surprised to notice that as on today only 14% of Indian population has a PAN card and only 2.89% (3.6 Cr people) file income tax return out of 117 Cr. By introducing this change government will be monitoring high value transactions. It will help government to enhance tax payer base.
20 Pan Card Changes Effective from 1st January, 2016
Quote Permanent Account Number (PAN) – It is mandatory to quote PAN card number for all sales and purchases of goods and services where the payment exceeds 2 Lakh regardless of mode of payment. Persons who do not hold PAN are required to fill a form and furnish the proof establishing identity.
Immovable property – All sale and purchase exceeding 10 Lakh it is mandatory to quote PAN card. Earlier limit was 5 Lakh. Any property valued by Stamp Valuation authority at amount exceeding Rs.10 lakh will also need PAN.
Motor vehicle – You need to mention PAN card on any sale or purchase of four wheel (Motor car).
Fixed Deposit – Fixed deposit aggregating amount more than 5 Lakh during financial year also need PAN.
Opening an account – One need to furnish PAN card while opening an account. Co-operative banks should also comply with this rule.
Hotel Bill – You need to furnish PAN card if you are paying Hotel/restaurant bill exceeding Rs.50,000 in cash.
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 – If you are making cash deposit of Rs 50,000 or more in a bank on single day you need to mention PAN Card.
Foreign travel – Quoting PAN card is mandatory for any cash payment in connection with foreign travel exceeding Rs 50,000. This rule is applicable for foreign currency purchase also.
Credit Card – It is mandatory to mention PAN card number while applying for credit card at any company or bank.
Mutual fund or Bond Purchase – If your mutual funds or bond purchase value is exceeding Rs.50,000 you need to mention PAN card number.
Shares of company – PAN card is mandatory on opening of DEMAT account or on purchase of unlisted company stock exceeding 1 Lakh.
Life insurance premium – In any year if life insurance premium is exceeding Rs. 50,000 you need to mention PAN card.
Purchase of jewelry/bullion – Earlier this limit was 5 Lakh, however now onwards for purchase of any Jewelry or bullion worth 2 Lakh you need PAN card.
Cash Card – If you are making cash payment using cash card or any prepayment instrument and transaction value is more than Rs. 50,000 in a year you need to mention PAN card number.
A chart highlighting the key PAN Card changes is given below.
|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|
|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|
|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.|
|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||Exceeding Rs.50,000/- on any one day.|
|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|
|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.|
These are welcome changes by the government of India and it will surely help our country in reducing black money and widening tax payer base. It will also boost cash less transactions.
What is your take on above PAN Card changes made by the government?
Source of Information – Press Information Bureau