In a major banking change from today, it will now be mandatory for customers to provide their PAN or Aadhaar card number for cash withdrawals/deposits amounting to Rs 20 lakh or more in a single financial year. The fresh guideline will also be applicable not just for commercial banks, but even co-operative banks or post offices.
The changed rule was announced by the Central Board of Direct Taxes (CBDT) in a notification dated May 10. Additionally, a person is required to apply for PAN at least seven days before making any of the aforementioned transactions, the notification read. The main objective behind this new rule is to put a check on unaccounted financial transactions through the cash route.
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PAN card mandatory for several transactions
1. It is mandatory to quote PAN to file an income tax return or to initiate any correspondence with the income tax authorities.
2. PAN card is required to open a bank or demat account or avail a credit or debit card.
3. When investing above Rs 50,000 in mutual funds, debentures or bonds, furnishing PAN details is mandatory.
4. Payment of an amount aggregating to more than Rs 50,000 in a financial year as life insurance premium to an insurer also needs a PAN.
5. PAN required for deposits of cash exceeding Rs 50,000 during any one day or a time deposit (fixed deposit) of amount exceeding Rs 50,000 or aggregating to more than Rs 5 lakh during a financial year with a banking company or a co-operative bank, a post office or a non-banking financial company.
6. One also needs to mention the PAN at the time of selling or purchasing a motor vehicle or vehicle other than two wheelers.
7. PAN is required for travel to any foreign country or payment for purchase of any foreign currency at any one time.
