The cash withdrawal and deposit system in India are in for a change from Thursday, that is May 26. The Centre has now made it compulsory for citizens to quote his or her PAN (permanent account number) or Aadhaar number, for withdrawing or depositing cash more than Rs 20 lakh from the bank accounts, including co-operative banks and post offices, in one financial year. These rules will also apply during the opening of a current account, the Central Board of Direct Taxes has said in a notification earlier this month.
“Every person shall, at the time of entering into a transaction specified in column (2) of the Table below, quote his permanent account number or Aadhaar number, as the case may be, in documents pertaining to such transaction, and every person specified in column (3) of the said Table, who receives such document, shall ensure that the said number has been duly quoted and authenticated,” the CBDT said in its notice dated May 10.
The columns 2 and 3 mention where the rules will be applicable, and how the persons who receive these PAN and Aadhaar numbers must ensure that they are authenticated.
Earlier PAN card was only required at the time of deposit cash exceeding Rs 50,000 in single day, but no annual limit for cash deposit or withdrawal was covered as per Rule 114 B. Apart from this, the limit was applicable only on deposit made in bank.
“The permanent account number or Aadhaar number along with demographic information or biometric information of an individual shall be submitted to the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) or the person authorised by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) with the approval of the Board, for the purposes of authentication referred to in section 139A,” further states the notification from the Centre.
“Section 139A specifies the persons or transactions who should apply for and quote PAN. However, since it could not cover all kinds of persons and transactions, it has delegated this to the Central Government. Hence CBDT can prescribe such transactions and persons. The CBDT, through this circular has accordingly prescribed the transactions of cash deposits and withdrawals of more than Rs. 20 lakhs through a bank or post office and opening of the current account or cash credit account as specified transactions for applying for PAN,” said Sujit Bangar, founder, Taxbuddy.com
“The persons who are entering into such transactions must apply for PAN at least 7 days before he/she intends to undertake these transactions. If a person who is already having PAN is required to quote his/her PAN while carrying out these transactions of cash deposits/withdrawals of more than Rs.20 lakhs and opening of a current account or a cash credit account,” Bangar added.
The new withdrawal and deposit rules are aimed at reducing financial frauds, as the income tax department will be able to monitor high-value cash transactions. It will also help trace money movements, as per experts. “The PAN-AADHAAR reciprocity will help banks to record details for those who don’t have PAN. This may help the tax department to plug some loopholes, such as for those high-value deposits and withdrawals where they say they don’t have PAN. This could be applied in case of agriculturists or the non-income taxpayers,” said CA Ruchika Bhagat, MD, Neeraj Bhagat & Co.
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