PAN Quoting & Reporting of financial transactions

PAN Quoting & Reporting of financial transactions By. CA. Tarun Jain. B.com, FCA. OBJECTIVE To tap the flow of black money To curtail & track unaccounted transactions Discourage cash transactions Encourage transactions through banking channels 1

MANDATORY QUOTING OF PAN LEGAL FRAME WORK Section Rules Sec. 139A Particulars Permanent Account Number (PAN) Sec. 271FAA Penalty for furnishing inaccurate information of financial transactions Sec. 272B Sec. 285BA Penalty for non quoting / incorrect quoting of PAN Obligation to furnish statement of financial transactions or reportable account R. 114B Transactions requiring mandatory quoting of PAN R. 114C Verification of PAN R. 114D Submission of information relating to Form 60 R. 114E Furnishing of statement of financial transaction 2

VARIOUS FORMS Forms Particulars 60 Form of declarations by person who does not have a Permanent Account Number (PAN) and enters in the transactions specified in Rule 114B 61 Statement containing particulars of declaration received in Form No. 60 61A Statement of Specified Financial Transactions under section 285BA(1) of the Income-tax Act, 1961 SEC-139A : PERMANENT ACCOUNT NUMBER Following person shall obtain PAN If total income exceeds the maximum amount chargeable to Income tax. Carrying on business or profession with gross turnover or receipt exceeding Rs. 5 lakhs Voluntary application for PAN Sou Motu allotment of PAN by AO. Any class or classes of person as may be notified by Central govt CST & State sales tax assessees Service tax assessees Central Excise Assessees Exporter & Importers 3

SEC-139A : PERMANENT ACCOUNT NUMBER Every person shall quote the PAN In all the income tax returns / correspondence with IT authorities In all the tax paid challans under the IT act In all the documents pertaining to such transactions as may be prescribed by the board. CBDT in exercise of the power conferred by Sec 139A(5)(c) of the IT act notified rule 114B specifying the transactions requirement mandatory quoting of PAN RULE 114B TRANSACTIONS REQUIRING QUOTING OF PAN. Nature of Transactions Sale / Purchase of Motor Vehicle Value of Transaction All transactions Opening of account with Banking Company / Cooperative Bank Application for Issue of Credit / Debit Card All Transactions All transactions 4

RULE 114B TRANSACTIONS REQUIRING QUOTING OF PAN. Nature of Transactions Opening of Demat Account Value of Transaction All transactions Payment to Hotel / Restaurant Cash payment exceeding Rs 50,000/- Payment for Foreign Travel and Foreign Currency Cash payment exceeding Rs 50,000/- RULE 114B TRANSACTIONS REQUIRING QUOTING OF PAN. Nature of Transactions Payment for purchase of Mutual Fund Units Value of Transaction Amount exceeding Rs. 50,000/- Payment to a company for purchase of debentures Payment for purchase of RBI Bonds Amount exceeding Rs. 50,000/- Amount exceeding Rs. 50,000/- 5

RULE 114B TRANSACTIONS REQUIRING QUOTING OF PAN. Nature of Transactions Cash deposit with Bank or co-operative Bank Cash purchase of Bank draft / pay order s Payment for prepaid instruments to Bank, Cooperative Society or any other company Value of Transaction a. Amount exceeding Rs. 50,000/- during any one day b. Aggregating to more than Rs. 2,50,000/- during 9 th Nov to 30 th Dec. (WEF 15-11-2016) Amount exceeding Rs. 50,000/- during any one day Amount exceeding Rs. 50,000/- in a financial year RULE 114B TRANSACTIONS REQUIRING QUOTING OF PAN. Nature of Transactions Payment for Life Insurance premium - Sale or purchase of securities - Sale or purchase of shares of unlisted company Sale or purchase of immovable property Value of Transaction Amount aggregating to more than Rs. 50,000/- per annum Amount exceeding Rs. 1,00,000/- per transaction Amount paid or Sec 50C value exceeding Rs. 10,00,000/- 6

RULE 114B TRANSACTIONS REQUIRING QUOTING OF PAN. Nature of Transactions Time Deposit with -Banking company -Co-operative Bank -Post Office -Nidhi -Non Banking Financial Company (NBFC) Sale or purchase of goods or services Value of Transaction Amount exceeding Rs. 50,000/- Or Aggregating to more than Rs. 5 Lakhs in a year Amount exceeding Rs. 2,00,000/- per transaction RULE 114B TRANSACTIONS REQUIRING QUOTING OF PAN. All bank accounts other than time deposits & Basic Savings Bank Deposit Accounts (BSDBA) to furnish PAN or Form 60 as applicable by 28 th February 2017. (WEF 6-1-2017) As per RBI Guidelines - BSBDA would be subject to the following conditions: i. Total credits in such accounts should not exceed one lakh rupees in a year. ii. Maximum balance in the account should not exceed fifty thousand rupees at any time iii. The total of debits by way of cash withdrawals and transfers will not iv. exceed ten thousand rupees in a month Foreign remittances can not be credited to Small Accounts without completing normal KYC formalities. v. Small Accounts can only be opened at CBS linked branches of banks or at such branches where it is possible to manually monitor the fulfillment of the conditions. 7

RULE 114C VERIFICATION OF PAN. RESPONSIBLE PERSON TO VERIFY PAN: Registering Officer appointed under registration Act 1908 Person who sells Immovable property Person who sells Motor Car Manager of Banking company / Co-operative Bank Post Master Stock Broker / Sub-broker / Share transfer agent etc Depository / Participant / Custodian Principal officer of the company Any Trustee of a mutual fund An officer of RBI Manager / Officer of Insurer To verify and correctly quote the PAN on any document for the transactions u/r 114B or obtain form 60 with all the information. RULE 114C VERIFICATION OF PAN. RESPONSIBLE PERSON TO VERIFY PAN: Any person issuing invoice / bills for For payment of hotel / restaurant For Payment of Foreign Travel / currency Sale or purchase of goods / services after verification of PAN shall quote it on any document Or in PAN is not available obtain declaration in form with complete particulars 8

FORM 61 - RULE 114D FILING OF STATEMENT Every person other than registering officer appointed under registration Act, Person required to get his accounts audited u/s 44AB in case of Recipient of amount for hotel / restaurant Recipient of amount for Foreign Travel / currency Recipient of amount for Sale of goods / services Shall furnish a statement in Form 61 for declarations received on or after 1-1-2016 for transactions covered by rule 114B containing particulars of such declarations to DIT (Intel & Cri Inv) through online transmission of data. Retain form 60 along with documents for 6 years from the end of financial year FORM 61 - RULE 114D FILING OF STATEMENT Every person who has received any declaration in form 60 shall furnish a statement in Form 61 for declarations received containing particulars of such declarations From 1 st April to 30 th September to be filed by 31 st October From 1 st October to 31 th March to be filed by 30 th April In respect of Transactions of cash deposit of Rs. 2,50,000/- and more between 9 th Nov to 30 th Dec to be filed by 15 th January 2017. (Notification dated 6-1-2017) 9

FORM 60 DETAILS TO BE VERIFIED Particulars to be verified by the person Issuing form 60 Name of the Declarant Date of Birth Complete postal address with contact details Other details Date & Amount of the Transaction Mode of settlement of transaction Estimated income from Agriculture & non agriculture ID & Address Proof list of permissible documents for ID & Address proof have been listed in the form. NOTE: person accepting the declaration shall not accept the declaration where the amount of income from non agricultural exceeds the maximum amount which is not chargeable to tax, unless PAN is applied. FORM 61 STATEMENT OF FORM 60 RECEIVED Statement containing particulars of declaration received in Form No. 60 Name of Reporting Person Reporting Entity Identification Number (ITDREIN) ITDREIN is the unique ID issued by IT department on registration. It is a16 digit registration number in the following format XXXXXXXXXX-YYYYY Particulars of the statements Principal officer details Person details (All the particulars of form 60) Transactions details (ID, date, type, amount & mode) 10

Reporting of Financial Transactions REPORTING OF FINANCIAL TRANSACTION 11

SEC 285BA REPORTING OF FINANCIAL TRANSACTION Introduced by Finance (No 2) Act 2014 wef 1-4-2015 o cast responsibility o on certain class of person / reporting entities o to furnish a statement o of specified financial transactions o of reportable account. o as may be prescribed In exercise of power under section 285BA DBDT notified rule 114E for furnishing of statement of financial transactions RULE 114E REPORTING OF FINANCIAL TRANSACTION Annual statement to be furnished Statement in form 61A Statement to contain information of specified transactions only Transaction on or after 1-4-2016 are reportable Statement to be furnished by specified reportable entity only To be furnished to DIT (Intel & Cri Inv) through online transmission Statement to be furnished on or before 31 st May Statement for transactions relating to demonetised period to be furnished on or before 31 st January 2017. 12

REPORTING OF FINANCIAL TRANSACTION BY BANKS Nature of Transactions Value Reporting Person Cash purchase of Demand drafts or Pay orders 10 Lakhs Banking Cash purchase of prepaid instruments 10 Lakhs Company Cash deposit in Current account Cash withdrawal from Current account Cash deposit in other than current account & Time deposit 50 Lakhs 50 Lakhs 10 Lakhs Co-operative Bank Post office The aforesaid transactions are reportable if the aggregate annual transactions are equal to or exceeds the aforesaid monetary limit. REPORTING OF FINANCIAL TRANSACTION BY BANKS Nature of Transactions Value Reporting Person One or more time deposit 10 Lakhs Banks, Co-operative Bank, Post office, Nidhi, NBFC s Payment for one or more credit card 1 Lakhs for cash Payment 10 Lakhs & more for other modes Banks, Co-operative Bank, Other Companies issuing the Credit Cards The aforesaid transactions are reportable if the aggregate annual transactions are equal to or exceeds the aforesaid monetary limit. 13

REPORTING OF FINANCIAL TRANSACTION BY COMPANIES Nature of Transactions Value Reporting Person Amount received for allotment of Bonds, debentures by the company 10 Lakhs Company or institution issuing the bonds or debentures Amount received for allotment of Shares by the company Buyback of shares by company from any person 10 Lakhs Company issuing the Shares 10 Lakhs Company listed on recognized stock exchange The aforesaid transactions are reportable if the aggregate annual transactions are equal to or exceeds the aforesaid monetary limit. REPORTING OF FINANCIAL TRANSACTION BY OTHERS Nature of Transactions Value Reporting Person Acquisition of units of Mutual funds 10 Lakhs Trustee of the Mutual fund Receipt for Sale of foreign Currency, FX Cards, Travelers cheque etc 10 Lakhs Authorised person under FEMA Purchase or sale of immovable property 30 Lakhs Sub-Registrar appointed under registration Act 1908 The aforesaid transactions are reportable if the aggregate annual transactions are equal to or exceeds the aforesaid monetary limit. 14

REPORTING OF FINANCIAL TRANSACTION BY OTHERS Nature of Transactions Value Reporting Person Receipt of cash payment for sale of goods or services 2 Lakhs Person liable for audit u.s 44AB of the IT Act 1961. All the aforesaid transactions are reportable if the aggregate annual transactions are equal to or exceeds the aforesaid monetary limit except in the case of Sale of Immovable Properties and Receipt of Cash payment for sale of Goods or services. (6-10-2016) REPORTING OF FINANCIAL TRANSACTION BY BANK - NEW Nature of Transactions Value Reporting Person Cash Deposit during 9 th Nov to 30 th Dec 2016 in one or more Current Accounts 12.50 Lakhs Cash Deposit during 9 th Nov to 30 th Dec 2016 in one or more accounts other than Current Accounts 2.50 Lakhs Banks, Co-operative Bank, Post office, Cash Deposit during 1 st April to 9 th Nov 2016 in respect of accounts reportable above No Limit The aforesaid transactions are reportable if the aggregate deposit amount during the period are equal to or exceeds the aforesaid monetary limit. The Aforesaid report is to be filed by 31-1-2017. 15

FORM 61A STATEMENT OF SPECIFIED FINANCIAL TRANSACTIONS THIS STATEMENT CONTAINING FOUR PARTS: PART A: STATEMENT DETAILS Name of Reporting Person Reporting Entity Identification Number (ITDREIN) Particulars of the statements Principal officer details PART B: REPORT OF AGGREGATED FINANCIAL TRANSACTIONS To report the aggregate Financial Transactions Person details (Name, Address, contacts, PAN etc) Transactions details ( Product Type, Aggregate Amount received, Aggregate amount received in cash) Financial Product Details (Time Deposits, Credit cards etc) FORM 61A STATEMENT OF SPECIFIED FINANCIAL TRANSACTIONS PART C: REPORTING OF BANK/POST OFFICE ACCOUNT Name of Account holder, No, type, status, Branch, Account summary Cash Credit & Cash Debit Account holder personal details PART D: REPORTING OF IMMOVABLE PROPERTY TRANSACTIONS Transactions Details (date, type, amount, property Type & details) Person details (Name, Address, contacts, PAN etc) 16

PENAL CONSEQUENSES Sec Particulars Penalty 272B Default by Taxpayer to comply with section 139A relating to quoting of PAN. Non quoting PAN Quoting wrong PAN Rs. 10,000/- 271FAA Any person (reporting financial institution) provides an inaccurate information in the statement of financial transactions due to -Failure to comply with due diligence -Deliberate submission of erroneous information -Person aware of the errors in at the time of submission -Person discovers the inaccuracies after the statement is submitted and fails to submit the correct information in 10 days Rs. 50,000/- Other Amendments FINANCE Act 2016 The government has also extend the provision of Tax Collected at source u/s 206C to the following: 1% TCS on sale of motor car exceeding value Rs. 10 Lakhs 1% TCS on sale of goods / provision for service exceeding Rs. 2 Lakhs if the any part of the consideration is received in cash. (WEF 1-6-2016) These provisions shall compliment the provisions of PAN Quoting and Transactions reporting. 17

BUDGET PROPOSAL FINANCE BILL 2017 No person can receive amount exceeding Rs. 3,00,000/- in cash Section 269ST In aggregate from a person in a day. In respect of a single Transaction. In respect of Transaction relating to one event or occasion from a person. 100% penalty for the contravention of provision of Section 269ST Section DA. 18

THANK YOU D Tarun Jain B.COM, FCA. 19