Soon, Tax Dept to send SMS on 18 types of high-value transactions- be careful about your transaction

Soon, you will receive an SMS from the Income Tax Department if you quote your Permanent Account Number (PAN) for 18 types of financial transaction where it is mandatory.

“We are going to act as an accountant for assessees,” PC Mody, Chairman of Central Board of Direct Taxes (CBDT), told BusinessLine. The assessees will be urged to mention the amount in the annual Income Tax Return, he said, adding that the work is in progress for the new technological platform and likely to start soon.

Since the Finance Bill, 2019 has prescribed interchangeability of PAN and Aadhaar, one can quote the unique identity number for all 18 financial transactions where quoting of PAN is mandatory, but he/she does not have PAN. Here too, SMS alert will be generated. Meanwhile, if an individual does not have PAN and he/she is quoting Aadhaar, then automatically Income Tax Department will allocate PAN from the back end.

As of now, over 120 crore individuals have 12-digit Aadhaar number. Similarly, as on March 31, 2019, 44.57 crore 10-digit PAN has been allotted, out of which nearly 25 crore have already been linked with the Aadhaar. Now, remaining will have to be linked with Aadhaar by September 30, falling which such PANs will be invalidated.

Rule 114B of Income Tax Rules prescribe 18 types of financial transactions where quoting of PAN is mandatory. These include all transactions related with sale or purchase of a motor vehicle or vehicle (not including two-wheelers), opening a bank account (not including Jan Dhan Account or a basic account), making an application for issue of credit or debit card and opening of a demat account.

The ₹50,000 threshold

Same will be applicable in the case of payment in cash of an amount exceeding ₹50,000 to a hotel or restaurant against a bill or bills at any one time, for travel to any foreign country or payment for purchase of any foreign currency at any one time, for payment to a mutual fund for purchase of its units and payment to the Reserve Bank of India, for acquiring bonds issued by it. Quoting PAN is mandatory in case one deposits more than ₹50,000 during one day in bank, co-operative bank or post office. This was also made mandatory for deposit aggregating to more ₹2.50 lakh during the period November 9, 2016 and December 30, 2016.

A time deposit with scheduled commercial bank, post office, Nidhi or with NBFC involving amount of more than ₹50,000 or aggregating to more than ₹5 lakh during a financial year will require quoting of PAN.

Payment in cash or by way of a bank draft or pay order or banker’s cheque of an amount aggregating to more than ₹50,000 in a financial year for one or more pre-paid payment instruments or for life insurance premium will not be completed without PAN or Form 60 for those who do not have PAN.

The financial identity number will be required for sale-purchase of securities other than shares or unlisted shares for an amount exceeding ₹1 lakh per transaction. Same rule will apply on sale-purchase of immovable property with amount exceeding ₹10 lakh or payment of more than ₹2 lakh for sale-purchase of any other goods apart from those mentioned specifically here.