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Mandatory Quoting of PAN

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Permanent Account Number (PAN)
A Permanent Account number (PAN) is a Ten Character alphanumeric based  Identification number issued in accordance with section 139 A of Income tax Act by the “Income Tax Department” to the person applies for it or to whom the department allots the number without an Application.

The main purpose of PAN is to provide the universal identification to all financial transaction and to prevent Tax evasion by keeping track of monetary transactions. Specially, those of high net worth individuals who can impact the economy.

The key benefits of PAN includes, Acceptable as a valid identification proof, Convenience to locate Assessing officer, Faster Assessment, Processing of Refunds, ensuring Tax compliance, Credit for Payment of Taxes, and control over undisclosed transactions.

Every person shall quote his Permanent Account number (PAN) in all his Returns and challan etc. with any Income Tax authority. In addition to this, every person shall quote his PAN in all the documents connect to the transaction specified in Rule 114B of Income Tax Act.

Nature of transaction

Value of transaction 

Sale or purchase of a motor   vehicle (other than two wheeler) All such transactions.
Opening an account [other than a time-deposit mentioned to at serial No. 12 and a Basic Savings Bank Deposit Account] with a bank and co-operative bank to which the Banking Regulation Act, 1949 applies. All such transactions.
Making an application to a bank/co-operative bank/any other company or institution, for issue of a credit or debit card to which the Banking Regulation Act, 1949 applies. All such transactions.
Payment to a hotel or restaurant against a bill or bills at any one time Payment in cash of an amount exceeding Rs.  50,000
Payment in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time. Payment in cash of an amount exceeding Rs.  50,000
Opening of a demat account with Depository Participant, Custodian , or any other person registered under SEBI Act, 1992 All such transactions
If Payment made to a Mutual Fund for purchase of its units Payment amounting more than Rs. 50,000

Nature of transaction

Value of transaction

Payment to a company or an institution for acquiring debentures/bonds issued by it Amount exceeding Rs. 50,000
Payment to the RBI for acquiring bonds issued by it Amount exceeding Rs. 50,000
Deposit with:

  • A bank/co-operative bank covered under the Banking regulation Act, 1949.
  • Post office
  • Deposits in cash exceeding Rs. 50,000 during any one day or
  • Exceeding Rs. 2,50,000 during November 9, 2016 and December 30, 2016
Purchase of bank drafts/pay orders/banker’s cheques from a bank/co-operative bank Payment in case for an amount exceeding Rs. 50,000 during any one day
A time deposit with bank/co-operative bank/post office/Nidhi/non-banking financial company Amount exceeding Rs. 50,000 or aggregating to more than Rs.5,00,000 during a financial year
Payment for one or more pre-paid payment instruments to a bank/co-operative bank/any other company or institution Payment through cash or through bank draft/pay order/banker’s cheque of an amount aggregating to more than Rs. 50,000 in a financial year
Payment as life insurance premium to an insurer Amount aggregating to more than Rs. 50,000 in a financial year
Nature of transaction Value of transaction
A contract for sale or purchase of securities (except shares) Amount exceeding Rs. 1,00,000 per Transaction
Sale or purchase of shares of any company which is not listed in recognized stock exchange Amount exceeding Rs. 1,00,000 per transaction
Sale or purchase an immovable property Amount exceeding Rs. 10,00,000 or valued by stamp valuation authority referred to in section 50C at an amount exceeding Rs. 10,00,000
Sale or purchase of goods and services by any person other than those which are covered above (from serial no. 1 to 17) Amount exceeding Rs. 2,00,000 per transaction
To remit money out of India All such transactions
To transfer of funds from NRE & NRO account All such transactions
Payment made  for purchase of jewellery and bullion Amount exceeding Rs. 5,00,000

Other important points

  • If a minor enters into any transaction prescribed above and also does not have any income which is taxable under Income tax can quote his father’s, mother’s & guardian’s PAN for the above purpose.
  • If a person doesn’t have PAN, he/she has to make declaration in Form 60 giving the particulars of such transaction either in electronic form or standard specified by Principal Director General of Income tax Act.
  • Relaxation has been provided to NRIs in quoting of PAN in some cases.
  • The provisions of this rule don’t apply to the following class or classes of person:
    • The Central Government, the State Governments and the Consular Offices.
    • The non-residents referred to in clause (30) of section 2 of the Act in respect of the transactions other than a transaction referred to at Sl. No. 1 or 2 or 4 or 7 or 8 or 10 or 12 or 14 or 15 or 16 or 17 of the Table.

Penalty for Contravention
According to section 272 B Penalty of Rs 10,000 shall levy in the following cases:

  • If any person holding more than one PAN which is allotted to him by mistake or error then you should immediately surrender the additional PAN card(s).
  • If you knowingly quote incorrect PAN in any document/transaction.
  • If you share incorrect Permanent Account Number with the person/bank/financial institution deducting/collecting the tax.
  • If any person is liable to obtain PAN but didn’t do so.

At AJSH, we assist our clients in dealing with PAN/TAN registrations,  ITR Filings, TDS Compliance, various corporate matters (Company incorporations, statutory audits, ROC Compliances, Company winding up), and related services by providing them adequate support and guidance from our end. If you have any questions or wish to know more about compliances related to quoting of PAN, kindly contact us.

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