Currently, PAN and Aadhaar are interchangeable for income tax purposes.
Currently, PAN and Aadhaar are interchangeable for income tax purposes.
The government has made it mandatory to quote either PAN or Aadhaar for depositing or withdrawing over 20 lakh in a financial year or opening a current account.
The Central Board of Direct Taxes (CBDT) said in a notice that providing the Permanent Account Number (PAN) or Aadhaar biometric will be mandatory for such high-value deposits or withdrawals from banks in a financial year, or opening a current account or cash advance account with a bank or post office.
Commenting on the move, Sandeep Sehgal, a partner at AKM Global Tax, said it will bring more transparency to financial transactions, where banks, post offices and co-ops would be required to report the transactions of deposits and withdrawals totaling 20 lakh or more in a financial year.
“Furthermore, making the mandatory condition of obtaining PAN for deposits and even withdrawals would help the government track the movement of cash in the system. All in all, this would exacerbate the whole process of suspicious cash deposits and withdrawals with the already existing TDS provision u/s 194N under the Income Tax Act 1961,” said Mr. Sehgal.
Currently, PAN and Aadhaar are interchangeable for income tax purposes.
An assessee must mention his/her PAN in all communications with the IT department and when entering into certain financial transactions.
However, there may be situations where a person making transactions of high value, such as B. buying foreign currency or large withdrawals from banks, does not own a PAN.
The Finance Act 2019 provides for interchangeability of PAN with Aadhaar.
It has been envisaged that any person who is required under the Income Tax Act to provide or provide their PAN and who has not been assigned a PAN but has the Aadhaar number can provide the biometric ID in place of the PAN.
Nangia & Co LLP partner Shailesh Kumar said once such a person cites the PAN, it will be easier for tax authorities to trace the transactions.
“The government has continually sought to expand its taxpayer base to bring under the tax net those people who may be making large transactions but do not own PAN,” Mr Kumar said.
After all, things can get tricky when a person is trying to avoid filing an income claim, he added.
