starting thursday quotes PAN and Aadhar Number This is mandatory if the cash deposits and withdrawals exceed Rs 20 lakh in a financial year. Individuals are also required to submit PAN or Aadhar card number while opening a current account or cash credit account with any bank or post office or co-operative bank. The Central Board of Direct Taxes (CBDT) announced this new rule through a notification issued earlier this month.
“Earlier no aggregate limit existed for cash deposits in accounts on annual basis, now it has been kept at Rs 20 lakh on annual basis. Being PAN linked, such transactions will leave a mark for the Income Tax Department. Further limit on cash withdrawal has been introduced, which was not there earlier. The intention is to reduce and track cash transactions,” said Archit Gupta, Founder and CEO, Clear.
All you need to know about the new income tax rule
1) Mentioning of Permanent Account Number (PAN) or Aadhaar is mandatory for depositing Rs 20 lakh or more in a financial year. The new rule will be applicable not only to bank accounts but also to post offices and cooperative societies.
2) For cash withdrawal of Rs 20 lakh or more from one or more bank accounts in banks, post offices, taxpayers will have to provide their PAN and Aadhaar details. Abhishek Soni, Co-Founder, Tax2Win, said, “This move will curb unaccounted financial transactions through the cash route.
3) Earlier, it was mandatory to mention PAN for cash deposits in bank accounts above Rs 50,000 in a day. However, no annual limit was set by the Income Tax Departments. The Finance Ministry amended the rule to include cash deposits and withdrawals for accounts in private and public sector banks as well as accounts in post offices or cooperative banks.
4) Those who are entering into such transactions will have to apply for PAN at least seven days before they intend to do the mentioned transactions.
5) The authorities of banks and post offices will have to duly authenticate the PAN or Aadhaar number of the taxpayers who have submitted the documents during the transaction or opening a new account. The demographic information or biometric information shall be submitted to the tax authorities as specified in the notification.
“Permanent Account Number or Aadhaar Number along with demographic information or biometric information of an individual shall be furnished to the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) or to a person authorized by the Principal Director. For the purposes of authentication referred to in section 139A, Director General of Income Tax (Systems) or Director General of Income Tax (Systems) with the approval of the Board,” the notification mentioned.
6) “This new rule has made the law stronger and harder to ignore. The mandatory condition of obtaining PAN or Aadhaar for deposits and withdrawals will help the government trace the movement of cash in the financial system. With the already existing provision of TDS deduction under Section 194N of the Income Tax Act, 1961, these rules are expected to further strengthen the loopholes,” said CA Ruchika Bhagat, managing director, Neeraj Bhagat & Co.
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