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Rediff News  All News  » Business » Now, quote PAN to buy gold in cash

Now, quote PAN to buy gold in cash

Last updated on: April 25, 2011 08:48 IST

Vrishti Beniwal in New Delhi

Under attack for not being able to curb black money transactions, the finance ministry is planning to make quoting of the permanent account number (PAN) mandatory for more transactions.

The income tax (I-T) department may make quoting of PAN in documents for sale and purchase of bullion or jewellery involving cash transfer of Rs 500,000 or more mandatory.

PAN may also be required for cash payment of Rs 100,000 or more as life insurance premium, amid concerns that insurgents may be parking funds in high-value insurance policies.

The department is also considering changes in the limits for cash payment for foreign travel. At present, the cap is Rs 25,000, including fare, the fee of a travel agent/tour operator and purchase of foreign currency.

"Rules are being changed with regard to PAN requirement in cash transactions to track the investment pattern of high net worth individuals. This will help curb black money," said a finance ministry official who did not want to be named.


Now, quote PAN to buy gold in cash

The Central Board of Direct Taxes (CBDT) may shortly notify the changes.

"Furnishing PAN is just one leg of the transaction. Whenever PAN is captured, the trader should put it in the invoice and summarise it in the form of the annual information return.

Then, the government can match the transaction with the return. The idea is to check black money, as cash transactions don't figure in official channels," said Amitabh Singh, tax partner, Ernst & Young.

The 10-digit PAN enables the I-T department to link all transactions of a person. It was introduced to facilitate linking of various documents, including payment of taxes, assessment, tax demand and tax arrears.

It facilitates easy retrieval and matching of information related to investment, borrowing and other business activities of tax-payers collected through various sources.


Now, quote PAN to buy gold in cash

From April 2010, all specified transactions without PAN attract tax. Tax higher than the prescribed rate or 20 per cent is deducted on all transactions liable to tax deducted at source (TDS) in cases where PAN is not available.

The law is also applicable to non-residents in respect of payments or remittances liable to TDS.

The I-T department has already made it mandatory for employers to quote PANs of employees and parties from whom tax is deducted while filing TDS returns.

The penalty for not quoting PAN, announced in Budget 2009, was aimed at strengthening the data base of the revenue department and increasing tax compliance.

Source: source