PAN and Aadhar mandatory for high-value cash transactionsDate: 14 May 2022 Tags: Bills & Laws
Permanent Account Number (PAN) or Aadhaar number has been made compulsory by the government for high-value cash withdrawal or deposit.
The rules apply to withdrawal or deposit of cash amounting to Rs 20 lakh or more in a financial year.
The move will help income tax department monitor high-value cash transactions, and deposits/withdrawals.
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.
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.
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.
The move of obtaining PAN for deposit and withdrawals can help the government in tracing the movement of cash in the financial system.
The existing loopholes in taxation system would be plugged along with the existing TDS deduction under Section 194N of Income Tax Act, 1961.
The current TDS rules were introduced in Union Budget 2019 for tax deduction at source (TDS) on cash withdrawals exceeding Rs 1 crore.
The Income Tax department can track financial transactions of agriculturists or the non-income taxpayers.
The alternative option of Aadhar will help banks to record details for those who don’t have PAN.
The Finance Act, 2019, has allowed for interchangeability of PAN with Aadhaar.