Mandatory quoting of PAN above Rs. 2 Lakh Transaction.

Question : Is Quoting of PAN is mandatory above Rs. 200000/- Transaction? 


Answer:
With the recent amendment in Rule 114 B vide press release 15th December 2015, government has made quoting PAN mandatory above Rs. 200000/- transaction. Government ignore the compliance requirement of companies doing thousand of transactions a day. and many of them with the small persons such as contractors, agriculturist etc who do have PAN as they do not have income exceeding the maximum exemption limits. There can be multiple of cases where the taking PAN from the person is not certainly possible. Does this requirement pushing companies to limit their transaction and face difficulty in doing business smoothly. Does this requirement challenge the ease of business.

I have tried out to present some provision which are favorable to the businesses and supporting the Non mandatory PAN requirement:

1. Text of Sec 139A (1):

(1) Every person,—

 (i) if his total income or the total income of any other person in respect of which he is assessable under this Act during any previous year exceeded the maximum amount which is not chargeable to income-tax; or

(ii) carrying on any business or profession whose total sales, turnover or gross receipts are or is likely to exceed five lakh rupees in any previous year; or

(iii) who is required to furnish a return of income under sub-section (4A) of section 139; or

(iv) being an employer, who is required to furnish a return of fringe benefits under section 115WD,

and who has not been allotted a permanent account number shall, within such time, as may be prescribed, apply to the Assessing Officer for the allotment of a permanent account number.

2. Text of Press Release: 

Considering the representations, it has been decided that quoting of PAN will be required for transactions of an amount exceeding Rs.2 lakh regardless of the mode of payment.

3. Text of Proviso to Rule 114 B: 

Provided further that any person who does not have a permanent account number and who enters into any transaction specified in this rule, shall make a declaration in Form No. 60 giving therein the particulars of such transaction. 

Taking PAN is mandatory only for those who have income above the maximum exemption limit. But for quoting of PAN, having PAN no is mandatory. 

So, from collective reading of all the provision above, if the person (who do not have PAN/or is not bound to take PAN as per Sec 139A (1) ) furnishes form 60 as specified, the requirement of quoting PAN can be waived. 

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Sec 207, A critical analysis !!!

I would like to draw your attention on Sec 207 of Income tax Act.

Sec Text is as under:

207. (1) Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as "current income".

(2) The provisions of sub-section (1) shall not apply to an individual resident in India, who—

(a) does not have any income chargeable under the head "Profits and gains of business or profession"; and

(b) is of the age of sixty years or more at any time during the previous year.

In Simple words Advance tax liability does not arise on senior citizen who does not have any income under Profit and gains of business and profession. 

Now, a question arise:

If an assessee is senior citizen and he is partner in Partnership firm and entitled to get profit from firm which is exempt under 10(2A) and not entitled to any remuneration and interest, Sec 207 apply on him and whether he is not liable to pay advance tax. ??

Answer is NO. He is not liable to pay any advance tax.

Analysis of Section 207: 

In Clause 2(a) of sec 207, the word used is 'CHARGEABLE'. But profit of the firm is not chargeable in the hands of partner.

So, if partner is senior citizen, he is NOT LIABLE to pay advance tax.  

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Posted in Income Tax Act 1961, Queries

Latest Tax and Accounts updates:

1. IAS (Ind AS) notified vide notification dated 16.02.2015. Link for such notification is :

http://www.mca.gov.in/Ministry/pdf/Notification_20022015.pdf

2. Removal of Minimum Export Price (MEP) on export of Potato 

3. ICAI Guidance Note on Accounting for Rate Regulated Activities. Link: http://220.227.161.86/25919asbrra170212.pdf 

4. FICCI introduced its Pre budget Memorandum 2015-16.

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