Same norm will apply for opening current account
Customers will need to quote their Permanent Account Number (PAN) in case of deposit or withdrawal of cash amounting ₹20 lakh from one or more bank accounts in a financial year or opening a current account.
The Central Board of Indirect Taxes (CBDT) has notified amendments in the Income Tax Rules, 1962, prescribing new transactions for quoting PAN. According to the notification, transactions include deposit/withdrawal of cash amounting to ₹20 lakh or more in a financial year through one or more bank accounts. Account(s) can be with commercial bank, co-operative bank or with post office. The same will be applicable for opening a current account or cash credit account with a banking company or cooperative bank or post office during the year.
Responsibility on the tax-payer
Anita Basrur, Partner (Direct Tax), Sudit K. Parekh & Co. LLP ,says in Budget 2020, the Government had introduced TDS (Tax Deducted at Source) on cash withdrawal in excess of ₹20 lakh. In addition to the above, the Government has now come up with the requirement of PAN in specified transactions. The Government has cast a responsibility on the taxpayer to quote the PAN and Aadhaar details at the time of entering the transaction and also on the banking company, co-operative bank and post office to ensure that these are quoted.
Further, “the PAN or Aadhaar number along with demographic information or biometric information of an individual need to be submitted to the tax authorities by the banking company, co-operative bank and post office. The Government will also come out with SOPs for the authentication of the PAN and Aadhaar,” she said.
According to Aakanksha Goel, Direct Tax Partner with T R Chadha & Co LLP, rules shall be applicable from May 26, 2022, and hence every person who intends to undertake aforestated transactions should obtain the PAN, otherwise such person would not be able to perform aforestated transactions. “Since the rules are applicable from May 26, 2022, clarification is required from CBDT as to whether the transactions concluded prior to May 26, 2022, shall be considered for computing the aggregate value of ₹20 lakh for this financial year or not,” she said.
Sujit Bangar, Founder, Taxbuddy.com, explains Section 139A specifies the persons or transactions who should apply for and quote PAN. However, since it could not cover all kinds of persons and transactions, it has delegated this to the Central Government. Hence CBDT can prescribe such transactions and persons. The CBDT, through this circular, has prescribed the transactions of cash deposits and withdrawals of more than ₹20 lakh through a bank or post office and opening of the current account or cash credit account as specified transactions for applying for PAN.
“The persons who are entering into such transactions must apply for PAN at least seven days before he/she intends to undertake these transactions,” he said, while adding that if a person who is already having PAN is required to quote his/her PAN while carrying out these transactions of cash deposits/withdrawals of more than ₹20 lakh and opening of a current account or a cash credit account.