The Reserve Bank of India (RBI) on Wednesday asked banks to ensure copies of PAN cards were being submitted for cash deposit exceeding Rs 50,000, if not already linked with customers’ account, to ensure tax rule compliance in the wake of the recent demonetisation move.
The RBI asked banks to insist on customers sharing their permanent account number (PAN) for all applicable transactions mandated under the Income Tax rule.
The directive follows the government order from last week that rendered the old 500 and 1,000 rupee banknotes illegal.
“With a view to ensuring compliance with provisions of 114B of the Income Tax Rules, 1962, the banks are advised that anybody depositing more than Rs 50,000 in cash in their bank account has to submit a copy of the PAN card in case the bank account is not seeded with PAN,” a notification said.
According to the 114B, every person is required to quote PAN for all documents pertaining to a time deposit with a bank or co-operative bank, post office, Nidhi or non-banking financial company which is allowed to accept deposits if the amount is more than Rs 50,000 or aggregating over Rs 5 lakh during a financial year.
Besides, customers also have to furnish PAN details for all transactions related to sale or purchase of motor vehicle/s, opening a bank account, applying a credit or debit card, opening a demat account and the like.
A customer must do so even when paying over Rs 50,000 in cash for hotels bills or travel to a foreign country or buying foreign currency.
Payment of over Rs 50,000 towards buying a mutual fund, bonds, bank drafts or pay orders and many other transactions also attract the same rules, according to the I-T ruling.
The government has been keeping a close vigil on the kind of deposits in bank accounts following the recent order and those who depositing over Rs 2.5 lakh in cash.
Banks and post offices have been asked to report to the I-T department all deposits above Rs 2.5 lakh in savings accounts, and more than Rs 12.50 lakh in current accounts, made during the 50-day window provided to tender the scrapped 500 and 1000 rupee notes.
These entities will also have to report cash deposits during the period aggregating to Rs 12.50 lakh or more, in one or more current account of a person.
The finance ministry has notified the amended Rule for filing of Annual Information Return (AIR) report by banking company, cooperative bank and post offices on account of aggregate cash deposits in one or more current account of a person.
Banks and post offices now have to file a statement of financial transaction in respect of these transactions on or before January 31, 2017, the notification said.
Earlier, they were required to report to the I-T department only when cash deposits in an account exceeded Rs 10 lakh in one full year.