PAN intimation and new AIR reporting requirements

PAN intimation &

new AIR reporting(Rule 114B~114E)

D K Bholusaria

[email protected]

Today’s Goal!

Understanding background

Section 139A(5) and 285BA(1)

Rule 114B~114E

Changes as compared to previous requirements

Penalties for default

Discussion and open house

Background

Government is committed to curb the circulation of black

money and widening of tax base

Recommendations of the Special Investigation Team (SIT) on

Black Money.

New rules are expected to be useful in widening the tax net

by non-intrusive methods.

Expected to help in curbing black money and move towards

a cashless economy.

(source: Press Information Bureau)

Who is required to have PAN?(Section 139A(1))

All persons -

if Total Income > Threshold limit

Company and Firms – Mandatory from day 1

Individuals and HUFs – more than 2.5 / 3 / 5 lacs

if in business, turnover > 5 lacs in any

previous year

if required to furnish return u/s 139(4A)

Form ITR7

Section 139A(5)

139A. Permanent Account number

…

(5) Every person shall—

…

(c) quote such number in all documents pertaining to such transactions as may be

prescribed* by the Board in the interests of the revenue, and entered into by him:

Provided that the Board may prescribe different dates for different transactions or class of transactions or for different class of persons

…

* Rule 114B~114D and form 60 and 61

Section 285BA(1)Obligation to furnish statement of financial transaction or

reportable account.

(1) Any person, being—

… long list…

who is responsible for registering, or, maintaining books of account

or other document containing a record of any specified financial

transaction or any reportable account as may be prescribed,under any law for the time being in force,

shall furnish a statement* in respect of such specified

financial transaction or such reportable account which is

registered or recorded or maintained by him and information

relating to which is relevant and required for the purposes of thisAct, to the income-tax authority or such other authority or agency

as may be prescribed*.

* Rule 114E and form 61A

Rule 114B~114D

Transactions where PAN is to be quoted in

all documents u/s 139A(5)(c)

As an overview, the new Rules

primarily provide for the following:

List of PAN reportable and monetary threshold

for such reporting transactions (Rule 114B);

List of specified persons responsible to ensure

PAN is duly quoted or in absence of PAN, a

declaration in Form 60 complete details is

furnished (Rule 114C);

Mode and manner of furnishing by certain

specified persons of half yearly statements

containing particulars of declarations received in

Form 60 (Rule 114D)

Sl# Nature of transactions Old New / Changes

1 Motor vehicles

(other than two

wheelers)

All sales/purchases No change

2 Opening an account with

a banking company.

(other than time deposit)

All new accounts.

(Co-op banks not covered

earlier)

No change except:

- Basic Savings Bank Deposit

Account excluded

- Co-operative banks added

3 Credit card Application to banking

company / any other

company / institution for

credit card

No change.

Co-operative banks also to

comply.

4 Opening of demat

account

No such requirement in old

rule

With a DP, custodian of

securities (escrow accounts) or

any other person registered u/s

12(1A) of the SEBI Act

5 Hotel / restaurant bill(s) > Rs.25,000/- at any one

time by any mode of

payment

Limit changed to Rs. 50,000/-.

Mode changed to CASH.

PAN Intimations

Sl. Nature of transactions Old New / Changes

6 Foreign travel Cash payment in connection

with foreign travel of an

amount exceeding

Rs.25,000/- at any one time

(including fare, payment to

travel agent, purchase of

forex) excluding Haj Travel

Limit increased to Rs. 50,000/-

All kinds of foreign travel

including Haj

7 Purchase of Mutual fund

units from Mutual funds

≥ 50,000/- for purchase > 50,000/- for purchase

8 Debentures/ bonds

issued by company /

institution

No separate requirement in

old rule

> 50,000/- for purchase

9 Purchase of RBI bonds No separate requirement in

old rule

> 50,000/- for purchase

PAN Intimations

Sl# Nature of transactions Old New / Changes

10 Cash deposit with

banking

company

≥ Rs.50,000/- or more

during any one day

(Co-op banks not covered)

> Rs.50,000/- during any one day

Co-op Banks included

11 Cash purchase of

bank drafts/ pay

orders/ banker's

cheques

≥ Rs.50,000/- or more

during any one day

(Co-op banks not covered)

> Rs.50,000/- during any one day

Co-op Banks included

12 Time deposit > Rs.50,000/-

with a banking company

(single deposit) (any mode)

i. Deposits with Co-op banks,

Post Office, Nidhi, NBFC

companies will also need PAN;

ii. Deposits aggregating to more

than Rs.5 lakh during the year

will also need PAN

13 Payment for prepaid

instruments issued

under Payment &

Settlement Act


old rule

Rs.50,000/- during any one day

- Co-op Banks included

- Mode of payment: Cash / DD /

Cheque / PO. Net banking /

NEFT / RTGS / IMPS excluded.

PAN Intimations

Sl. Nature of transactions Old New / Changes

14 Life insurance

premium


old rule

> 50,000/- per financial year

15 Sale or purchase of

securities

Contract for sale / purchase

of a value exceeding Rs.1

lakh per transaction

"Shares" excluded now.

16 Sale or purchase of

Shares of Unlisted

Company


old rule

> 1 Lakh per transaction

17 Sale or Purchase of

Immovable property

Valued at Rs.5 lakh or

more

i. Sale/ purchase exceeding

Rs.10 lakh;

i. Properties valued by Stamp

Valuation authority at amount

exceeding Rs.10 lakh will also

need PAN.

18 Purchases or sales of

goods or

services


old rule

Purchase/ sale of any goods or

services exceeding Rs.2 lakh

per transaction.

PAN Intimations

Certain transactions deleted / merged

Purchase of new shares of a company

Deposit with Post Office Savings Bank

Installation of telephone / cell phone

connections

Purchase of jewellery / bullion

Expanded scope of Form 60

Additional Info:

A. number of other joint parties involved in the

transaction

B. mode of payment

C. the PAN application number, if applied for

D. estimated total income of the declarant, if

PAN is not applied for

E. A verification stating that he does not possess

a PAN and that his estimated total income is

below taxable threshold

Changes in exempt categories

Old Rule New Rule

a) Non-residents (NR);

b) Central Government, State

Government and Consular

Offices in transactions where

they are the payers.

c) Persons who have agricultural

income and are not in receipt

of any other taxable income

a) NRs will now need to furnish PAN

(or form 60) for certain

reportable transactions

b) Government (Central as well as

State) and Consular offices

continue to be exempted from

all PAN reportable transactions

whether they are payers or

otherwise.

c) Persons earning agricultural

income (without any other

taxable income) are now

required to file a declaration in

new Form 60 itself (instead of

old Form 61).

Duty of person accepting declaration /

PAN info

Obliged to verify compliance of PAN reporting

Obliged to verify that PAN provided is correct

Obtain form 60 is PAN not furnished.

Shall not accept form 60 where the amount of

income (other than agricultural income)

mentioned in column of estimated total

income in Form 60 exceeds the taxable

threshold unless PAN is applied for by the

declarant.

E-filing of form 60 (as form 61)

Old Rule required every person receiving Form 60 to

forward hard copy thereof to the jurisdictional Tax

Authority on 6 monthly basis.

Instead, now 6 monthly e-filing of particulars thereof

along with details of relevant PAN reportable

transactions in new Form 61 made mandatory.

Hard copy of form 60 to be maintained for 6 years

starting from date of receiving.

E-filing of new Form 61 does not apply to persons:

issuing bills in relation to transactions of hotel payments,

foreign travel and sale of any other goods/ services if such

persons are not under obligation to get their accountsaudited under section 44B.

E-filing of form 60

To be submitted with:

Joint Director / Director of Income-tax (Intelligence and CriminalInvestigation)

Due dates:

1. Half year ending September 30:October 31st

2. Half year ending March 31: April30th

Rule 114E

AIR reporting

AIR reporting

PAN reporting compliance on individual transactions

is complemented by AIR obligation for persons who

are obligated to verify PAN reporting compliance.

AIR involves furnishing of information to Tax Authority

on annual basis.

Apart from PAN reportable transaction, scope of AIR

obligation also extends to certain additional

financial transactions like cash withdrawals from

bank accounts, credit card transactions etc.

The new Rules have modified scope of AIR and

monetary thresholds for transactions subject to AIR

AIR Significant changes - AdditionsNature of Financial Transactions Specified class of persons

(reporting persons)

Purchase of bank instruments:

i. Purchase of bank drafts/ pay orders/ banker’s cheque

in cash aggregating ≥ Rs.10 lakhs in a financial year

ii. Purchase of pre-paid instruments issued by RBI under

Payment and Settlement Systems Act in cash

aggregating ≥ Rs.10 lakhs during the financial year

Cash deposit/ withdrawal* in Current account:

i. Cash deposits OR cash withdrawals (including through

bearer’s cheque) aggregating ≥ Rs. 50 lakh in a

financial year, in or from one or more current account of

a person.

I. A banking company; or

II. A co-operative bank

Cash deposits in other accounts:

Cash deposits aggregating ≥ Rs. 10 lakhs in a financial

year, in one or more accounts (other than current account

and time deposits) of a person

I. A banking company; or

II. A co-operative bank

III. Post Master General as

per Indian Post Office Act

* Cash deposits and cash withdrawals limits to be computed independently

AIR Significant changes - Additions

Nature of Financial Transactions Specified class of persons

(reporting persons)

Time Deposits:

One or more time deposits aggregating ≥ Rs. 10 lakhs in a

financial year (other than a time deposit made through

renewal of another time deposit)

I. A banking company;

II. A co-operative ban

III. Post Master General as per Indian Post

Office Act

IV. Nidhi company

V. NBFC registered with RBI to hold public

deposits

Buy back of shares:

Buy back of shares from any person for amount or value

aggregating ≥ Rs. 10 lakhs in a financial year (other than

the shares bought in the open market)

A listed company undertaking buy back

of its shares as per Indian Companies Act

Sale of foreign currency by Authorised Person:

Receipt of funds from any person for sale of foreign

currency by Authorised Person including any credit of such

currency to foreign exchange card or expense in such

currency through a debit or credit card or through issue of

travellers’ cheque or draft or any other instrument of an

amount aggregating ≥ Rs. 10 lakhs during a financial year.

Authorised person under Foreign Exchange

Management Act

AIR Significant changes - Additions

Nature of Financial Transactions Specified class of persons

(reporting persons)

Cash sale of goods/ services:

Receipt of cash payment > Rs.

2 lakhs for sale of goods or

services (not specifically covered

under any other categories of new

Rule)

Person (seller) liable to get

his accounts audited* for tax

purposes under Income Tax

Laws

* Audit based on gross turnover/ receipt threshold

AIR - changes in monetary limitsNature of Financial

transaction

Earlier limit New limit

Credit card payments Payments aggregating to

≥ Rs. 2 lakhs in a financial

year

Payments (in respect of one or more cards)

aggregating to:

1. ≥ Rs. 1 lakh in cash

2. ≥ Rs. 10 lakhs by any other mode in a

financial year

Receipt from any person for

acquisition of bonds/ debentures

issued by company/ institution

(primary subscription)

≥ Rs. 5 lakhs Amount aggregating to ≥ Rs. 10 lakhs in a

financial year [Other than the amount

received on renewal of bond/ debenture]


acquiring shares issued by a

company (primary subscription)

≥ Rs. 1 lakh

(public or rights issue)

(share application excluded)

(private placement excluded)

Amount aggregating to ≥ Rs. 10 lakhs in a

financial year

- share application money included

- Private placement included now


acquiring units of a Mutual Fund≥ Rs. 2 lakhs Amount aggregating to ≥ Rs. 10 lakhs in a

financial year [Other than amount received

on account of transfer of funds from one

scheme to another scheme of that Mutual

Fund]

Purchase or sale of immovable

property≥ Rs. 30 lakhs as per

agreement

≥ Rs. 30 lakhs as per agreement or as

valued by stamp duty authority

AIR reporting – other changes

The new Rule provides clarifications on aggregation forcomputing the monetary thresholds for AIR (e.g. in case of joint

holding in any account or transaction, same information shall

be furnished for all joint holders)

AIR return to be furnished exclusively online under DSC. Only

exception is for Post Master General and Registrar/Inspector

General, who may furnish return in floppy/CD/DVD

The time limit for furnishing AIR has been preponed to 31 May(instead of 31 August) immediately following the relevant

financial year.

Penalties for non-compliance

Penalties and prosecution

Any person making a false statement in the declaration (Form60) shall be liable for prosecution under Income Tax Act and if

found guilty shall be punishable with rigorous imprisonment

(from 3 months to 7 years) and fine.

Section 271FA: Failure to file AIR return

Non compliance to sec 285BA(1) – Rs. 100 per day

Non compliance to sec 285BA(5) – Rs. 500 per day

Section 272B: Non compliance of section 139A / 139A(5) – Rs.

10,000

Questions?

Thanks for your valuable

time ! !