 "15 financial transactions that cannot be done with an inoperative PAN")
The government created the permanent account number (PAN) to enable matching of information relating to investments, loans, and other business activities of taxpayers collected through various sources for expanding the tax base.
As per section 139AA of the Income Tax Act, 1961, it was mandatory to link Aadhaar number with PAN by June 30. According to the Central Board of Direct Taxes (CBDT) guidelines, if it is not linked, PAN will be inoperative from July 1, 2023.
According to Dr Suresh Surana, founder RSM India -- a business consulting firm: Rule 114B of the Income Tax Rules, provides for transactions wherein every person is required to quote their Permanent Account Number (PAN) and the said list provides for the 18 transactions which are mentioned hereinbelow. Considering that the coverage of transactions where PAN is required to be quoted is fairly wide, there will be many instances where such
Defaulters would face challenges in undertaking specified transactions if their PAN becomes inoperative. For instance, some of the routine banking transactions such as depositing more than Rs 50,000 in a bank account or payment of insurance premium exceeding Rs 50,000 or even application for credit/debit card. Senior citizens who fail to link the PAN with Aadhaar would be impacted as currently, the exemption provided is only to citizens of the age of 80 years or more at any time during the year, according to a report in The Economic Times (ET).
The other category of persons who have been exempted from linkage of PAN and Aadhaar include residents of Assam, Jammu and Kashmir, Meghalaya, non-residents as per the Income Tax Act and persons who are not citizens of India.
Many investors are unable to carry out financial transactions such as MF investments or stock trading, according to the ET report.
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With the PAN becoming inoperative, there are certain financial transactions that cannot be done by an individual.
If the PAN status is inactive or inoperative, an individual will not be able to do the following 15 transactions.
-Opening an account with a banking company or a co-operative bank
-Making an application for issue of credit or debit card
-Opening of a demat account with a depository, participant, custodian of securities or any other person with the securities and exchange board of India (SEBI)
-Payment in cash of an amount exceeding Rs 50,000 to a hotel or restaurant at any one time
-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
-Payment of an amount exceeding Rs 50,000 to a mutual fund for purchase of its units
-Payment of an amount exceeding Rs 50,000 to a company or an institution for acquiring debentures or bonds issued by it
-Payment of an amount exceeding Rs 50,000 to the Reserve Bank of India (RBI) for acquiring bonds issued by it
-Deposits of cash exceeding Rs 50,000 during any one day with a banking company or a co-operative bank
-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
-A time deposit of an amount exceeding Rs 50,000 during a financial year with a bank company or a co-operative bank
-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 the RBI 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
-Payment of an amount aggregating to more than Rs 50,000 in a financial year as life insurance premium to an insurer
-A contract for the sale or purchase of securities (other than shares) for the amount exceeding Rs 1 lakh per transaction
-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
Below is a list of financial transactions where higher tax will be deducted due to inoperative PAN:
-Sale or purchase of a motor vehicle or vehicle other than two-wheeled vehicle
-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
-Sale or purchase of goods or services of any nature other than those specified above for an amount exceeding Rs 2 lakh per transaction