NEW DELHI: In a bid to widen the scope of tax base, the government on Wednesday made it mandatory to quote PAN and Aadhaar numbers for cash deposits and withdrawals exceeding Rs 20 lakh in a financial year.
This will be applicable to all the cash deposits or withdrawals made to banks, cooperative banks or post offices from May 26, as per the notification issued by the Central Board of Direct Taxes (CBDT). In addition, PAN and Aadhaar will be required for opening of a current account or cash credit account with a banking company or a cooperative bank to which the Banking Regulation Act, 1949, applies and post office.
Currently, only deposits exceeding Rs 50,000 a day require quoting of PAN or Aadhar. Currently, there are no annual thresholds mentioned. Also, no such requirement is currently in place for withdrawals or opening of current accounts or cash credit accounts.
According to experts, the government’s intention is to bring those people who deal in high-value transactions but do not have PAN number under tax net. They easily escape without paying taxes, which leads to generation of black money. With the new rules in place, it will be easier for the government to trace money circulation. Commenting on the new rules, Sandeep Sehgal, Tax-Partner, AKM Global, said,
“This shall bring in more transparency to transactions where banks, post offices and co-operative societies would be required to report the transactions of deposits and withdrawals aggregating to Rs 20 lakh or more in a financial year. The condition of obtaining PAN for deposit and withdrawals would help government in tracing the movement of cash in the system.”