Starting from Thursday, quoting PAN and Aadhaar number is a must if the cash deposits and withdrawals exceeds Rs 20 lakh in a financial year. Individuals also need to submit PAN or Aadhaar card number while opening a current account or a cash credit account with a bank or a post-office or a co-operative bank. The Central Board of Direct Taxes (CBDT) announced this new rule via a notification released earlier this month.
“Earlier no aggregate limit existed for cash deposit in accounts on an annual basis, now this has been kept at Rs 20 lakh on an annual aggregate basis. Due to linkage of PAN such transactions will leave a trail for the income tax department. Further limit has been introduced on cash withdrawals, which was not the case earlier. The intent is to reduce and track cash transactions,” Archit Gupta, founder and chief executive officer Clear.
All you Need to Know About the New Income Tax Rule
1) It is mandatory to mention Permanent Account Number (PAN) or Aadhaar for depositing Rs 20 lakh or more in a financial year. The new rule will be applicable not only to the bank accounts but also to the post offices and co-operative society.
2) For cash withdrawals of Rs 20 lakh or more from one or more bank accounts with banks, post offices, the taxpayers need to quote their PAN and Aadhaar details. “This move will put a check on unaccounted financial transactions through the cash route,” said Abhishek Soni, co-founder Tax2Win.
3) Earlier, it was mandatory to mention PAN for cash deposits to the bank accounts, exceeding Rs 50,000 in a single day. However, there was no annual limit set by the Income Tax departments. The finance ministry amended the rule to include cash deposits and withdrawals for the accounts in post-offices or co-operative banks, along with the accounts in private and public sector banks.
4) Those who are entering into such transactions must apply for PAN at least seven days before they intend to undertake the mentioned transactions.
5) The officials at the banks and post offices must duly authenticate the PAN or Aadhaar number of the taxpayers furnishing the documents during the transactions or opening a new account. The demographic information or biometric information shall be submitted to tax authorities as specified in the notification.
“The permanent account number or Aadhaar number alongwith 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,” the notification mentioned.
6) “This new rule has made law stronger and more difficult to ignore. The mandatory condition of obtaining PAN or Aadhaar for deposit and withdrawals would help the government in tracing the movement of cash in the financial system. Along with the already existing provision of TDS deduction under Section 194N of the Income-tax Act, 1961, these rules are expected to further tighten the loopholes,” said CA Ruchika Bhagat, managing director, Neeraj Bhagat & Co.
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