Financial Transactions in Which Quoting of PAN is Mandatory

PAN is a very useful tool to estimate the total tax revenue being generated in the country and to be used as an identification document is not its primary job.

Although Aadhaar is gradually gaining more importance than PAN — a ten-digit unique alphanumeric number issued by the Income Tax Department — however, PAN is still important, especially for financial transactions. According to experts, PAN is a way for the Income Tax Department to keep tabs on your financial dealings whereas Aadhaar’s main purpose is to create a centralized database of each citizen residing in India. PAN, in fact, is a very useful tool to estimate the total tax revenue being generated in the country and to be used as an identification document is not its primary job. Aadhaar, on the other hand, authenticates a person’s identity as it is linked with the name, photograph, and biometric data.

Those who are not aware of it need to know that a Permanent Account Number (PAN) has been made compulsory for every transaction with the Income-Tax Department. It is also mandatory for numerous financial transactions such as opening of bank accounts, deposit of cash in bank accounts, opening of a Demat account, transaction of immovable property, dealing in securities, among others.

As per rule 114B, following are the transactions in which quoting of PAN is mandatory by every person except the Central Government, the State Governments and the Consular Offices:

1. Sale or purchase of a motor vehicle or vehicle other than two wheeled vehicles.​ ​
2. Opening an account [other than a time-deposit referred at point №12 and a Basic Savings Bank Deposit Account] with a banking company or a co-operative bank​
3. Making an application for issue of a credit or debit card.
4. Opening of a demat account with a depository, participant, custodian of securities or any other person with SEBI
5. Payment in cash of an amount exceeding Rs. 50,000 to a hotel or restaurant against bill at any one time.
6. Payment in cash of an amount exceeding Rs. 50,000 in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time.
7. Payment of an amount exceeding Rs. 50,000 to a Mutual Fund for purchase of its units
8. Payment of an amount exceeding Rs. 50,000 to a company or an institution for acquiring debentures or bonds issued by it.
9. Payment of an amount exceeding Rs. 50,000 to the Reserve Bank of India for acquiring bonds issued by it.
10. Deposit with a banking company or a co-operative bank:-
11. ​Cash exceeding Rs. 50,000 during any one day; or
12. Cash deposit of aggregating to more than Rs. 2,50,000 during the period 09th November, 2016 to 30th December, 2016
13. Payment in cash for an amount exceeding Rs 50,000 during any one day for purchase of bank drafts or pay orders or banker’s cheques from a banking company or a co-operative bank.
14. A time deposit of amount exceeding Rs 50,000 or aggregating to more than Rs 5 lakh during a financial year with-
15. a banking company or a co-operative bank
16. a Post Office;
17. a Nidhi referred to in section 406 of the Companies Act, 2013 or
18. a non-banking financial company
19. Payment in cash or by way of a bank draft or pay order or banker’s cheque of an amount aggregating to more than Rs 50,000 in a financial year. for one or more pre-paid payment instruments, as defined in the policy guidelines for issuance and operation of pre-paid payment instruments issued by Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007 to a banking company or a co-operative bank or to any other company or institution.
20. Payment of an amount aggregating to more than Rs.50,000 in a financial year as life insurance premium to an insurer.
21. A contract for sale or purchase of securities (other than shares) for amount exceeding Rs 1 lakh per transaction.
22. Sale or purchase, by any person, of shares of a company not listed in a recognised stock exchange for amount exceeding Rs 1 lakh per transaction.
23. Sale or purchase of any immovable property for an amount exceeding Rs 10 lakh or valued by stamp valuation authority referred to in section 50C of the Act at an amount exceeding Rs 10 lakh.
24. Sale or purchase of goods or services of any nature other than those specified above for an amount exceeding Rs 2 lakh per transaction.
25. To Remit money out of India
26. Pan information is required for transfer of funds from NRE to NRO account
27. Payments made for more than Rs.5 lakhs towards purchase of jewellery and bullion also require PAN information of the purchaser to be furnished

​A minor entering into any of above transaction and also doesn’t have any income chargeable to tax can quote his father’s, mother’s or guardian’s Permanent Account Number (PAN).

A person who doesn’t have PAN has to file a declaration in Form 60 giving the transactions details.

The provisions of this rule does not applies to the following class or classes of persons

• The Central Government, the State Governments and the Consular Offices.
• The non-residents referred to in clause (30) of section 2 of the Act in respect of the transactions other than a transaction referred to at Sl. №1 or 2 or 4 or 7 or 8 or 10 or 12 or 14 or 15 or 16 or 17 of the Table.

Penalty for Contravention

Section 272B defines the penalty for contravention of above rules.

1. If a person who is required to collect PAN is unable to do so, Assessing officer may impose penalty of Rs. 10,000.
2. If a person who is required to quote his PAN quotes a false PAN, Assessing officer may impose penalty of Rs. 10,000.

Assessing officer is required to give an opportunity to being heard before imposing any penalty.

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