From May 26 onwards, anyone who deposits or withdraws Rs 20 lakh or exceeds from one or more bank accounts in a fiscal year shall need to quote the Permanent Account Number (PAN) during the withdrawal time.
Towards the purpose of restricting the evasion of taxes via the use of cash, the Central Board of Indirect Taxes (CBDT) circulated the changes to the income tax rules that have made mention of PAN mandatory for those who make high deposits and withdrawals over the cash counter.
That shall be subjected to apply during the opening of the current account. The same rule shall be subjected to apply to the accounts which have been already linked to a Permanent Account Number (PAN) card number.
The amended rules shall be imposed from May 26.
PAN Income Tax Rules for Cash Transaction and Withdrawal
- The government specified that the action is in sync with the scheme to diminish the cash usage for the transactions and the force for the digital modes.
- CBDT circulate the changes in the ITR, 1962 mentioning the new transactions to receive and quoting PAN.
- The notification specified that “the term transactions include deposit/withdrawal of cash amounting to Rs 20 lakh or more in a financial year through one or more bank accounts. Account(s) with not just commercial bank but even co-operative bank or post offices.”
- In the budget for 2020, the Finance ministry incorporated the Tax deducted at source (TDS) on the withdrawal of cash in excess of Rs 20 lakh, and the same revision to the compliance would be added for the particular transactions.
- Through this, the government has put the burden of quoting the PAN and Aadhar information during the time of executing a transaction both on consumer and financial institutions, which consists of banks, co-operative banks, and a post office.
- From the sources, it specified that the government shall arrive with SOPs towards the authentication of the PAN and Aadhaar.
- Via this, there is yet another filter in place to ensure that everyone who operates a bank account obtains a PAN to furnish the cash transactions of Rs 20 lakh or exceeds.
Banks and financial institutions will wait for clarification from the government on the method to deal with the rule in the coming times concerning the transactions made before May 26, 2022, the last date, the financial year begins in April.
The notification subjected to apply to the PAN rule for cash deposits or deposits aggregating to twenty lakh rupees or more in a financial year, in one or exceeding account of an individual with a banking company or a co-operative bank where the Banking Regulation Act, 1949 (10 of 1949) uses along with any bank or banking institution referred to in section 51 of that Act or a Post Office.
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It identically applied to the “cash withdrawal or withdrawals aggregating to twenty lakh rupees or more in a financial year, in one or exceeding account of an individual with a banking company or a co-operative bank towards the Banking Regulation Act, 1949 (10 of 1949) applies (along with any bank or banking institution referred to in section 51 of that Act) or a Post Office.
The same mentioned that “every person shall, at the time of entering into a transaction specified in the column, quote his permanent account number or Aadhaar number, as the case may be, in documents pertaining to such transaction, and every person specified in column (3) of the said Table, who receives such document, shall ensure that the said number has been duly quoted and authenticated”.
The CBDT mentioned that beneath the latest rule the permanent account number or Aadhaar number, as well as demographic details or biometric details of the person, will be submitted to the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems or the individual authorized by the Principal director general of income tax (systems) or Director General of Income-tax (Systems) through the approval of the board towards the purpose of authentication referred to in section 139A.
The principal director general of income tax systems or Director General of Income-tax (Systems) will put the format and standards including the process for the authentication of the permanent account number or Aadhaar number.
