Monday, June 12, 2023

PAN Quoting in Income Tax Transactions and Penalties for contraventions

PAN (Permanent Account Number) quoting is a vital requirement in specific transactions under the Income Tax Act. It ensures transparency and accountability in financial dealings. Let's explore the key points and penalties associated with PAN quoting.

Section 139A(5)(c):

ü  PAN Quoting Requirement: The CBDT mandates the quoting of PAN in transactions prescribed by the authority.

ü  Buyer-Seller Responsibility: Sellers of goods or services are responsible for collecting the PAN from buyers.

Rule 114B - Transactions Requiring PAN Quoting:

ü  Motor Vehicle Transactions: All sales or purchases of motor vehicles, except two-wheelers, require PAN quoting.

ü  Banking Transactions: Opening a new account with a banking company, excluding time deposits, necessitates PAN quoting.

ü  Credit Card and Debit Card Applications: PAN quoting is compulsory for all credit card or debit card transactions.

ü  Demat Account Opening: PAN quoting is necessary for opening a Demat account.

ü  Cash Payments: PAN must be quoted for cash payments exceeding fifty thousand rupees in hotels/restaurants, foreign travel expenses, Mutual Fund investments, debenture/bond acquisitions, and more.

ü  Other Transactions: PAN quoting is required for various transactions, including large cash deposits, purchase of bank drafts/pay orders/banker's cheques, time deposits, payments for prepaid payment instruments, life insurance premiums, sale or purchase of securities, sale or purchase of shares of unlisted companies, sale or purchase of immovable property, and other goods or services exceeding two lakh rupees per transaction.

Consequences of Non-Compliance:

ü  Failure to Collect PAN: Penalties of Rs. 10,000 may be imposed if the person required to collect PAN fails to do so.

ü  Quoting False PAN: Penalties of Rs. 10,000 may be imposed if a person required to quote PAN provides false information.

Conclusion: Quoting PAN in specified income tax transactions is crucial for maintaining transparency and accountability. By adhering to these requirements, individuals and businesses contribute to a robust tax system. Failure to comply with PAN quoting provisions can lead to penalties. It is essential to understand and fulfill these obligations to ensure a smooth and lawful financial environment.