PAN and Aadhar mandatory for high-value cash transactions
Date: 14 May 2022 Tags: Bills & LawsIssue
Permanent Account Number (PAN) or Aadhaar number has been made compulsory by the government for high-value cash withdrawal or deposit.
Background
The rules apply to withdrawal or deposit of cash amounting to Rs 20 lakh or more in a financial year.
Details
The move will help income tax department monitor high-value cash transactions, and deposits/withdrawals.
The rules
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The rules by CBDT apply to high-value cash deposits or withdrawals from banks in a financial year, or the opening of a current account or cash credit account with a bank or post office.
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Financial institutions such as post offices and co-operative societies will be required to report deposits and withdrawals aggregating to Rs 20 lakh or more in a financial year.
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The current rules mandate furnishing PAN card if cash deposit of Rs 50,000 or more is made in a day. The new rules of Rs 20 lakh applies to whole financial year.
Significance
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The move of obtaining PAN for deposit and withdrawals can help the government in tracing the movement of cash in the financial system.
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The existing loopholes in taxation system would be plugged along with the existing TDS deduction under Section 194N of Income Tax Act, 1961.
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The current TDS rules were introduced in Union Budget 2019 for tax deduction at source (TDS) on cash withdrawals exceeding Rs 1 crore.
Other benefits
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The Income Tax department can track financial transactions of agriculturists or the non-income taxpayers.
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The alternative option of Aadhar will help banks to record details for those who don’t have PAN.
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The Finance Act, 2019, has allowed for interchangeability of PAN with Aadhaar.