AFTER demonetisation of R500 and R1000 currency notes, the income tax (I-T) department has issued a new list of transactions for which quoting PAN is mandatory.
AFTER demonetisation of R500 and R1000 currency notes, the income tax (I-T) department has issued a new list of transactions for which quoting PAN is mandatory. To keep track of cash deposits of demonetised currency till December 30 and to ensure that tax evaders do not misuse other people’s bank accounts, it has notified banks for fresh reporting of statement of financial transaction known as Annual Information Return (AIR).
All cash deposits in banks and post offices above R50,000 a day and aggregating R2.5 lakh during November 9-December 30, 2016 will require quoting of PAN. Demonetised cash will not be accepted if PAN is not quoted and tax evaders
cannot get away by making multiple deposits of less than R50,000 without quoting their PAN. The rule applies to all bank accounts of the individual. Cash deposits of over R2.5 lakh will reflect in Form 26AS and the account holder will have to explain the source of the cash.
The PAN has to be mentioned for purchase of bank drafts, pay orders and banker’s cheques from a banking company or a co-operative bank in cash for an amount of over R50,000 in a day. It has to be mentioned for making fixed deposits and opening a bank account except a Jan Dhan or a Basic Bank Deposit Account.
Till date, the I-T department has issued around 25 crore PAN and those requiring it for complying with the new requirements will have to apply to the NSDL with copies of proof of identity, address and date of birth. PAN application fee is R107 inclusive of service tax for Indian communication address and R994 for foreign communication address. Payment of application fee can be made through credit/debit card, demand draft or net-banking. Once application and payment is accepted, the applicant will have to send the supporting documents to NSDL or UTITSL. After the receipt of the documents, PAN application will then be processed.
Reporting for AIR
AIR captures all the high-value transactions done by individuals. Banks send AIR every year to the I-T department, which is required to be furnished under Section 285BA of the Income Tax Act. Under the new rule, banks and post offices will have to generate a separate report for November 9-December 30.
All banks and post offices will report aggregate cash deposits over R2.5 lakh in the AIR as against the current norm of R10 lakh and above. Also, aggregate cash deposits above R12.5 lakh in current account during November 9-December 30 will have to be reported by the banks to the I-T department.
Moreover, according to current norms, all payments made in cash for purchase of bank drafts, pay orders or banker’s cheque of an amount aggregating R10 lakh or more in a financial year will have to be reported by banks in the AIR. Receipt from any person of over R10 lakh for buying bonds, debentures, shares issued by companies, units of
mutual funds will have to be reported in the AIR. Even sale or purchase of immovable property for an amount of
R30 lakh or more valued by the stamp valuation authority will have to be reported in the AIR.