Under attack for not being able to curb black money transactions, the India's finance ministry is planning to make quoting of the permanent account number (PAN) mandatory for more transactions.
The income tax (I-T) department may make quoting of PAN in documents for sale and purchase of bullion or jewellery involving cash transfer of Rs. 5 lakh or more mandatory.
PAN Number may also be required for cash payment of Rs. 1 lakh or more as life insurance premium, amid concerns that insurgents may be parking funds in high-value insurance policies.
The department is also considering changes in the limits for cash payment for foreign travel. At present, the cap is Rs. 25,000, including fare, the fee of a travel agent/tour operator and purchase of foreign currency.
According to a finance ministry official,"Rules are being changed with regard to PAN Number requirement in cash transactions to track the investment pattern of high net worth individuals. This will help curb black money."
The Central Board of Direct Taxes (CBDT) may shortly notify the changes.
Mr. Amitabh Singh, Tax Partner, Ernst & Young said, "Furnishing PAN is just one leg of the transaction. Whenever PAN is captured, the trader should put it in the invoice and summarise it in the form of the annual information return. Then, the government can match the transaction with the return. The idea is to check black money, as cash transactions don't figure in official channels" .
The 10-digit PAN enables the I-T department to link all transactions of a person. It was introduced to facilitate linking of various documents, including payment of taxes, assessment, tax demand and tax arrears. It facilitates easy retrieval and matching of information related to investment, borrowing and other business activities of tax-payers collected through various sources.
From April 2010, all specified transactions without PAN number attract tax. Tax higher than the prescribed rate or 20% is deducted on all transactions liable to Tax Deducted at Source (TDS) in cases where PAN is not available. The law is also applicable to NRI's (Non Residents Indians) in respect of payments or remittances liable to TDS.
The I-T department has already made it mandatory for employers to quote PANs of employees and parties from whom tax is deducted while filing TDS returns. The penalty for not quoting PAN, announced in Budget 2009, was aimed at strengthening the data base of the revenue department and increasing tax compliance.
Src: rediff.com
The income tax (I-T) department may make quoting of PAN in documents for sale and purchase of bullion or jewellery involving cash transfer of Rs. 5 lakh or more mandatory.
PAN Number may also be required for cash payment of Rs. 1 lakh or more as life insurance premium, amid concerns that insurgents may be parking funds in high-value insurance policies.
The department is also considering changes in the limits for cash payment for foreign travel. At present, the cap is Rs. 25,000, including fare, the fee of a travel agent/tour operator and purchase of foreign currency.
According to a finance ministry official,"Rules are being changed with regard to PAN Number requirement in cash transactions to track the investment pattern of high net worth individuals. This will help curb black money."
The Central Board of Direct Taxes (CBDT) may shortly notify the changes.
Mr. Amitabh Singh, Tax Partner, Ernst & Young said, "Furnishing PAN is just one leg of the transaction. Whenever PAN is captured, the trader should put it in the invoice and summarise it in the form of the annual information return. Then, the government can match the transaction with the return. The idea is to check black money, as cash transactions don't figure in official channels" .
The 10-digit PAN enables the I-T department to link all transactions of a person. It was introduced to facilitate linking of various documents, including payment of taxes, assessment, tax demand and tax arrears. It facilitates easy retrieval and matching of information related to investment, borrowing and other business activities of tax-payers collected through various sources.
From April 2010, all specified transactions without PAN number attract tax. Tax higher than the prescribed rate or 20% is deducted on all transactions liable to Tax Deducted at Source (TDS) in cases where PAN is not available. The law is also applicable to NRI's (Non Residents Indians) in respect of payments or remittances liable to TDS.
The I-T department has already made it mandatory for employers to quote PANs of employees and parties from whom tax is deducted while filing TDS returns. The penalty for not quoting PAN, announced in Budget 2009, was aimed at strengthening the data base of the revenue department and increasing tax compliance.
Src: rediff.com
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