PAN for premia: limit may be cut to Rs 10,000
In the days to come, you may be required to quote your Permanent Account Number (PAN) for insurance premium payments of more than Rs 10,000 per annum. The finance ministry is constituting an inter-ministerial group to examine this issue and bring down the threshold of PAN requirement for premia paid.
In a letter to the insurance regulator and the life insurance council, among others, the ministry communicated that it is setting up a committee to examine this issue, and has sought the comments of the regulator. HT has a copy of the letter.
Currently, quoting PAN is mandatory for annual premiums of Rs 1 lakh and more.
The committee would examine "The requirement of mandatory quoting of PAN number for all insurance policies beyond a low threshold of, say, insurance premium of Rs 10,000 per annum," said the letter.
The Insurance Regulatory and Development Authority (IRDA) says that this is being done to bring rules in line with the international norms against money laundering.
"The ministry of finance that looks into the anti-money laundering business says that internationally the level is lower and hence there is a discussion going on to bring it lower," said J Hari Narayan, chairman, IRDA.
The insurance industry body feels that this will impact the insurance business in the non-metro cities and rural areas.
"This limit is very low as people in rural areas only have cash," said SB Mathur, secretary general, Life Insurance Council.
If this happens, there is likely to be some resistance on the operational front as people who don't have a PAN card will have to apply for it before getting a policy that has a premium beyond the set limit.
"After this, only accounted money will come into the system," said an independent financial planner.