All high-value jewellery purchases, debit card requests, overseas travels, and life insurance premiums over 50, 000 will soon be tagged, with the Central Board of Direct Taxes making it mandatory to quote permanent account numbers (PAN) in such transactions. The Income-Tax department has amended rules to add these items to the list of financial transactions where disclosure of PAN is compulsory. The new rules will be notified soon. The move is the latest in a series of measures taken by the department to crack down on black money. A large amount of cash is used to carry out these transactions and quoting PAN will help in keeping track of any tax evasion, said an incometax official. PAN is a 10-digit alphanumeric identification issued by the IT Department to an individual. It is mandatory to quote PAN in all tax returns. According to the new rules, anyone paying in cash for jewellery over 5 lakh will have to quote his PAN number at the time of purchase. Those applying for debit cards, paying life insurance premium of more than 50, 000, or travelling abroad will also be required to disclose their PAN details. Quoting of PAN will allow the Income-Tax Department to map expenditure by an individual to his income. This will alert the department in cases where spending is in excess of known sources of income.
Experts, however, are sceptical of the move. Providing monetary limits and that too on a per-transaction basis, like in the case of bullion and jewellery, is an exercise in futility as people who want to avoid attention will enter into multiple transactions just below the specified limit, said Amitabh Singh, partner, Ernst & Young. There should be a system of real-time, online verification of PAN, just like there is for credit cards, so that the cases of quoting fake PANs is mitigated. At present, PAN is required in property transactions, sale or purchase of motor vehicles requiring registration other than two-wheelers, time deposits of more than Rs 50, 000 with any bank or company, and for opening savings accounts or depositing more than Rs 50, 000 with post offices. It is also compulsory to quote PAN in applications for credit cards and while paying hotel and restaurant bills exceeding Rs 25, 000 in one go. Tax deducted at source (TDS) on payments could be as high as 20% if PAN is not quoted. The regular rate of TDS is between 2% and 10%. The Income-Tax Department issues PAN in partnership with UTI Technology Services Ltd and National Securities Depository Ltd. The department has issued 100 million permanent account numbers till date. The annual tax filings, however, are only about 33 million because of exemptions and under-reporting of income. – www.economictimes.indiatimes.com
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