Soon, you will have to furnish your PAN or Aadhar if you wish to make cash withdrawals or deposits of over Rs 20 lakh in a financial year. This would apply to cash transactions beyond this limit at banks, including cooperative banks and post offices. You will have to mandatorily quote either Pan or Adhar to open a current or cash credit account with a bank or post office. The main objective of the circular is to put a check on unaccounted Financial Transactions through the cash route. This circular aims to curb cash transactions by limiting the threshold for such transactions. If the assessee (individual, corporate, HUF, or society) deposits or withdraws any cash amount crossing the point in the financial year, the banking institution or any reporting persons must inform the I-T department about the transactions. Based on this, the I-T department will match the dealings with the previous I-T return. If there is any discrepancy, it will send high-value transaction notices asking for an explanation and information on the source of the cash from the taxpayer.
The rules are an effort by the government to combat the accumulation of black money and will help it keep a check on the circulation of cash in the economy.
The rules are an effort by the government to combat the accumulation of black money and will help it keep a check on the circulation of cash in the economy. This will help the government track suspicious cash transaction in bank accounts that earlier went untapped due to the non-availability of PAN. Department will conduct inquiries wherever required. Eventually, these rules will help in growing the taxpayer base. The government has constantly been striving to increase its taxpayer base to bring people who may be entering into large transactions but do not hold a PAN under the tax net. Quoting PAN or Aadhaar while executing high-value transactions will compel the depositor to file an income tax return or face the taxman’s wrath. Once such a person quotes the PAN, it will be easier for the tax authorities to track transactions. It may become complicated when a person tries to avoid filing a return of income. The CBDT notification clarifies that the onus of ensuring that the rule is being followed depends on both the account holder and institutions such as banks and post offices.