Company deposits, PO savings may require flashing PAN
March, 24th 2008
You may now have to quote your permanent account number (PAN) in more financial instruments such as fixed deposits of companies or National Savings Certificates. The finance ministry is examining various financial instruments where quoting PAN can be made mandatory.
PAN is a 10-digit alphanumeric tax payer identification number allotted to an individual for identification and to relate to various transactions and information pertaining to her. It is to be mandatorily mentioned in all income-tax returns.
In his Budget speech, finance minister P Chidambaram had said, The fear of the PAN has virtually disappeared. PAN is now the sole identification number for all participants in the securities market. I propose to extend the requirement of PAN to all transactions in the financial market subject, however, to suitable threshold exemption limits.
The ministry is now looking at various instruments and transactions including insurance, banking and certain small savings instruments where quoting PAN could be made mandatory. However, as stated by the finance minister, quoting PAN would be made mandatory only above a certain level of investment, sources said. Quoting PAN allows tax authorities to establish an audit trail. Last year, quoting of PAN was made mandatory for mutual funds investments.
At present, the PAN should be disclosed in the documents pertaining to purchase or sale of property and sale or purchase of a motor vehicle requiring registration other than two-wheelers. A time deposit of more than Rs 50,000 with a banking company or opening of savings account and deposit of more than Rs 50,000 with post-office savings bank requires PAN. However, the requirement is not mandatory when investing in post-office National Savings Certificate or Kisan Vikas Patra.
Payment to hotels and restaurants against bills exceeding Rs 25,000 at a time and application for issue of a credit card require mandatory quoting of PAN.
With PAN being quoted in these transactions, it is easier for the department to get information on a taxpayer, match it with her return or create a ledger based on the information for use if it detects evasion.