Depositing or Withdrawing this much money in a year from Post Office or Bank, this Document is Mandatory

To curb tax evasion, the government has now increased its guard. A new rule has been made to prevent tax evasion from cash transactions across the country.

If you withdraw or deposit Rs.20 lakh from your account in a financial year or open a current account, then you will have to provide PAN number or Aadhaar number. The government has made it mandatory. The Central Board of Direct Taxes (CBDT) has issued a notification saying that it will be mandatory to provide Permanent Account Number (PAN) or Aadhaar number if a person makes high value deposits or withdrawals during a financial year or in any bank or post office. Opens Current Account or Cash Credit Account.

It will be mandatory to provide PAN details

According to the notification of CBDT, now if a person deposits or withdraws more than Rs 20 lakh from a bank account in a financial year, then it will be mandatory to give PAN information. CBDT has made it mandatory to provide PAN card information by amending the Income Tax Act rules for those transacting huge amount from the bank counter. The purpose of bringing this is to discourage cash transactions and prevent tax evasion through it.

New rules apply from 26 May

The CBDT has said in its gazette notification that the new rule will come into effect from May 26. This rule will be equally applicable to the accounts running in banks, co-operative banks and post offices. At the same time, the same rule will be valid at the time of opening a current account. Not only this, people whose accounts are already linked with PAN, they will also have to follow this rule. This is in line with the government’s policy of less use of cash and promotion of digital transactions.

All account transactions will be included

It has been clarified in the notification that transactions mean deposits and withdrawals of Rs.20 lakh or more from one account or other accounts in a financial year. In the budget of 2020, the government had made a provision of TDS on cash withdrawal of Rs.20 lakh. This rule was then made for certain types of transactions. Now in the new rule that has been made, along with the customer, banks, cooperative banks and post offices will have to give details of PAN and Aadhaar at the very beginning of the transaction. The new rule will act as an additional filter that will ensure the use of PAN card for those doing cash transactions of more than Rs.20 lakh from bank accounts. Sources have informed that very soon the government will also bring Standard Methods (SOPs) related to authentication of PAN and Aadhaar.

Banks await clarification

Although banks and other financial institutions are waiting for the government’s clarification regarding this rule, as the financial year has started from April, how will the transactions done before May 26 be calculated?

People who are required to provide PAN under the Income Tax Act and do not have a PAN can provide their Aadhaar biometric ID. Shailesh Kumar, Partner, Nangia & Co. LLP said if a person doing such transactions mentions PAN, it will become easier for the tax authorities to track such transactions.