PAN is now mandatory to deposit Rs.2000 Notes above this limit in Bank Account; Know Details

The Reserve Bank of India (RBI) has discontinued the issue of Rs.2000 notes. Individuals who have Rs.2000 notes in their possession can now swap them for other denomination notes at a bank or deposit them into their bank accounts. However, if you deposit more than Rs.50,000 in a single transaction, you must provide your PAN in accordance with income tax regulations.

Rule 114B of the Income Tax Rules requires a person to quote his/her PAN if the cash deposit in a single day with a bank or post office exceeds Rs.50,000. However, if the amount deposited does not exceed Rs.50,000 in a single day, mentioning PAN is not required.

Here’s an example to help you understand. Assume you deposit cash of Rs.30,000 in Rs 2000 banknotes into your bank account. And 15 days later, you deposit another amount of cash Rs.40,000 in Rs.2000 banknotes into the same bank account. Because a single transaction in a day can not exceed Rs 50,000, you must quote your PAN while making a cash deposit of Rs.2000 notes. If, on the other hand, you made a single cash deposit of Rs.70,000 (Rs.30,000 + Rs.40,000) on a single day, the bank will want you to cite your PAN at the time of the cash deposit.

The government has made citing PAN or Aadhaar essential if cash deposits or withdrawals exceed Rs 20 lakh in a financial year. The Central Board of Direct Taxes (CBDT) published the notification on May 10, 2022, and the new rules went into effect on May 26, 2022.

In addition to depositing, an individual can swap Rs.2,000 notes. The RBI, however, has set a restriction on the quantity of notes that may be exchanged. According to the RBI statement, an individual can swap up to ten notes or Rs.20,000 at a time.

In a press conference on May 22, 2023, the RBI governor stated that banks will follow their own procedures and policies while exchanging Rs.2,000 notes.

There is, however, no restriction to the number of deposits that can be made in the bank account. In the case of deposits, the KYC regulations will apply.

The deadline for depositing or exchanging Rs.2000 notes is September 30, 2023. As part of its clean money strategy, the central bank has decided to withdraw Rs 2000 notes from circulation while maintaining that the Rs.2000 note remains legal tender.