CBDT Notifies Amendments in Rule 114B on Mandatory Quoting of PAN & Rule 114E on AIR to Monitor Cash Deposits in Banks
With a view to monitor cash deposits in banks, etc. in the wake of demonetization decision of the Govt. (specially to target transactions of converting black money using other’s bank accounts), the CBDT has amended Rule 114B making quoting of PAN mandatory for cash deposits exceeding Rs. 50,000 in one day or exceeding Rs. 2.5 Lacs during 9 Nov. 2016 to 30 Dec. 2016. Also CBDT has amended Rule 114E requiring Banks/ Co-op. Banks to submit information in AIR about aggregate cash deposits of more than Rs. 12.5 lacs in Current A/c or Rs. 2.5 Lacs in SB A/c during 9 Nov. 2016 to 30 Dec. 2016.
A businessman having a Current Account as well as a SB Account can make aggregate cash deposit of Rs. 15 lacs (12.5 + 2.5), which shall not be a subject to AIR reporting, however the same shall continue to be subject to Income Tax scrutiny any time in the ordinary course of assessment proceedings. For further details, please refer below:
A. Cash Deposit Transactions with Banks in Relation to which Quoting PAN is Mandatory
The Income Tax Department prescribes a list of transactions for which quoting of Permanent Account Number (PAN) is mandatory. These are listed in Rule 114B of the Income Tax Rules, 1962 which were first inserted with effect from 1st November, 1998 and have been amended from time to time. The list under Rule 114B as on date requiring PAN to be quoted includes the following banking transactions :
i) Deposit with a banking company or a co-operative bank in cash exceeding fifty thousand rupees during any one day.
ii) Purchase of bank drafts or pay orders or banker’s cheques from a banking company or a co-operative bank in cash for an amount exceeding fifty thousand rupees during any one day.
iii) A time deposit with a banking company or a co-operative bank or a Post Office
iv) Opening an account [other than a time-deposit referred to above or a Jandhan / Basic Bank Deposit Account] with a banking company or a co-operative bank.
In addition to the existing requirement of quoting of PAN in respect of cash deposits in excess of Rupees fifty thousand in a day, quoting of PAN will now also be mandatory in respect of cash deposits aggregating to Rupees two lakh fifty thousand or more during the period 9 Nov. 2016 to 30 Dec. 2016 as per an amendment notified by CBDT on 15-11-2016.
The Income Tax Department has already issued close to 25 crore PAN till date. The persons requiring a PAN for complying with the above requirement may do so by applying to the NSDL in a prescribed format with the necessary documentary proof.
B. Amendments in Rule 114B on Mandatory Quoting of PAN & Rule 114E on AIR
G.S.R 1068(E). – In exercise of the powers conferred by section 285BA, read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. (1) These rules may be called the Income–tax (30th Amendment) Rules, 2016. (2) They shall come into force from the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), in rule 114B, in the Table, for serial number 10 and entries relating thereto the following serial number and entries shall be substituted, namely:-
|Sl. No.||Nature of transaction||Value of transaction|
(i) a banking company or a cooperative bank to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);
(i) exceeding fifty thousand rupees during any one day; or
|(ii) Post Office.||(ii) aggregating to more than two lakh fifty thousand rupees during the period 09th November, 2016 to 30th December, 2016.|
3. In the said rules, in rule 114E, –
(i) in sub-rule (2), in the Table, after serial number 11 and entries relating thereto the following serial number and entries shall be inserted, namely:-
|Sl. No.||Nature and value of transaction||Class of person (reporting person)|
|12||Cash deposits during the period 09th November, 2016 to 30th December, 2016 aggregating to –|
(i) twelve lakh fifty thousand rupees or more, in one or more current account of a person; or
|(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);|
|(ii) two lakh fifty thousand rupees or more, in one or more accounts (other than a current account) of a person.||(ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).”;|
(ii) in sub-rule (5), the following proviso shall be inserted, namely:-
“Provided the statement of financial transaction in respect of the transactions listed at serial number (12) in the Table under sub-rule (2), shall be furnished on or before the 31st day of January, 2017.”.
Note:- The principal rules were published vide notification S.O. 969 (E), dated the 26th March, 1962 and last amended vide notification S.O.3399(E), dated 07th November, 2016.