Direct Tax Alert - Obtaining and quoting of PAN mandatory for certain transactions
13 May 2022
Section 139A (1) of the Income-tax Act, 1961 (IT Act) provides for instances where a taxpayer is mandatorily required to obtain a Permanent Account Number (PAN). This section also grants power to the Central Board of Direct Taxes (CBDT) to notify additional transactions where the person is required to obtain PAN and quote it while undertaking such specified transactions. Further, as per Section 139A(6A) of the IT Act, any person entering prescribed transactions is required to quote their PAN or Aadhar number and ensure that the same is authenticated. Recently on 10th May 2022, the CBDT notified1 transactions where PAN is to be obtained by the person entering such transactions. We, at BDO in India, have summarized this notification and provided our comments on the same hereunder:
Transaction for which PAN is to be obtained
A notification has inserted Rule 114BA in the Income-tax Rules, 1962 (IT Rules) to provide that where the taxpayer intends to enter the following transactions, such taxpayer shall be mandatorily required to obtain PAN
- Cash deposit aggregating to INR 20 lakhs or more in a fiscal year, in one or more accounts of a person with a Bank or a Co-operative Bank or a Post Office.
- Cash withdrawal aggregates to INR 20 lakhs or more in a fiscal year, in one or more accounts of a person’s Bank or a Cooperative bank or a Post Office.
- Opening a current account or cash credit account by a person with a Bank or a Co-operative Bank or a Post Office.
Such taxpayers shall be required to make an application at least 7 days before such transactions are to be undertaken.
The above requirement shall be effective after the expiry of fifteen days from the date of the publication of the Notification (i.e., from 25th May 2022)
Further, the Notification has inserted Rule 114BB in the IT Rules, stating that the respective banks or co-operative banks or Postmaster General receiving such documents, shall verify that the PAN or Aadhar number is duly quoted and authenticated.
While there is a limit for cash transactions, no limit is mentioned for the taxpayer to open a current account. Thus, for opening a current account with any bank, the taxpayer should now obtain and quote his PAN. An additional responsibility has been cast on the Banks / Co-operative Bank / Post Office to ensure that the PAN / Aadhar quoted by the taxpayer are authenticated
1 CBDT Notification No. 53/2022 dated 10 May 2022