PAN - A deadly weapon for tax department

Gone are the days you can treat it just like any other easily obtainable another govt identification card . It is a tremendous too for the tax department to track your financial transactions thanks to the information technology and govt's will to use it to optimum use.

However the requirement of declaring or even obtaining PAN under Section 139(5A) will not apply to a person whose income is not taxable. All he has to do is furnish a declaration under Section 197A in Form 15G/15H that tax on his income will be nil.

But then ,except for senior citizen any person, whose aggregate income from dividend, interest, withdrawal of deposits with NSS and income in respect of units exceeds the basic exemption limit cannot furnish Form 15G for non-deduction. Violation of section 139 and section 197 may attract fine of Rs 10,000 for each default or failure. So you can afford to take it lightly . But actual threat is much bigger and all encompassing .With this single identifier tax sleuths can hunt down any all your transaction and even all other related financial activities.

Let us just have a glimpse of cases where we need to declare our PAN which in itself clarify my point that PAN has brought in silent revolution in tax assessment and IT governance.

1) All returns, quarterly statements, challans or correspondence with the income tax authorities should include the PAN. It is necessary to quote the PAN in documents related to the following transactions:

2) Opening a bank account.

3) Application for issue of a credit card.

4) A cash deposit of Rs 50,000 or more with any bank during any one day.

5) Contract of sale or purchase of securities exceeding Rs 1 lakh in value, including shares, bonds, debentures, derivatives, units and government securities.

6) Cash payment of Rs 50,000 or more for purchase of bank drafts, pay orders or bankers cheques during any one day.

7) Cash payment exceeding Rs 25,000 in connection with travel to any foreign country (fare or purchase of foreign currency).

8) Application for installation of telephone, including cellular telephone.

9)Payment to hotels and restaurants against bills exceeding Rs 25,000 at any one time.

10) Sale or purchase of immovable property valued at Rs 500,000 or more. If there are co-owners (buyer or seller), the PAN of both the owners will have to be mentioned. If a nominee holds the property, the PAN of the legal owner must be mentioned.

11) Sale or purchase of a motor vehicle requiring registration other than two-wheelers.

12) A time deposit of more than Rs 50,000 with any banking company and deposit of more than Rs 50,000 with post-office savings bank. This requirement is not mandatory when investing in post-office National Savings Certificate or Kisan Vikas Patra, and the PAN will be required only if the time deposit exceeds Rs 50,000.

13) Payment of Rs 50,000 or more to a mutual fund for purchase of units or to a company for acquiring its shares or to a company/institution for acquiring its debentures/bonds or to RBI for acquiring bonds.

14) Minor intending to open time deposit or bank account should quote the PAN of either father or mother or guardian in whose hands income is likely to be clubbed.

15) Any person (other than non-residents) who receives any sum or income or amount from which tax has been deducted must provide the PAN to the person/organisation that has deducted tax at source as per Section 139(5A).

16) Buyer of specified goods like alcoholic liquor, tendu leaves, timber, forest produce and scrap for trading and every licensee or lessee of parking lots, toll plazas, mines or quarries, has to provide the PAN to the seller/licensor.

17) Any person who has deducted tax at source must quote the PAN of the payee in all the TDS certificates, TDS returns and statements of perquisites and profits in lieu of salary (Section 139(5B)).