To curb tax evasion, the government has now increased its guard. A new rule has been made to prevent tax evasion from cash transactions across the country. The Central Board of Direct Taxes (CBDT) has issued a notification for this.
It will be mandatory to give PAN details
According to the notification of CBDT, now if a person deposits or withdraws more than Rs 20 lakh from a bank account in a financial year, then it will be mandatory to give PAN information. CBDT has made it mandatory to provide PAN card information by amending the Income Tax Act rules for those transacting huge amount from the bank counter. The purpose of bringing this is to discourage cash transactions and prevent tax evasion through it.
CBDT has said in its gazette notification that the new rule will be applicable from May 26 onwards. This rule will be equally applicable to the accounts running in banks, co-operative banks and post offices. At the same time, the same rule will be valid at the time of opening the current account. Not only this, people whose accounts are already linked to PAN, they will also have to follow this rule. This is in line with the government’s policy of less use of cash and promotion of digital transactions.
It has been clarified in the notification that the transaction means the deposit and withdrawal of 20 lakh rupees or more from one account or other accounts in a financial year. In the budget of 2020, the government had made a provision of TDS on cash withdrawal of Rs 20 lakh. This rule was then made for certain types of transactions. Now the new rule has been made, along with the customer, banks, co-operative banks and post offices will have to give the details of PAN and Aadhaar at the very beginning of the transaction. The new rule will act as an additional filter that will ensure the use of PAN card for those doing cash transactions of more than Rs 20 lakh from bank accounts. Sources have informed that very soon the government will also bring standard modalities (SOPs) related to authentication of PAN and Aadhaar.
Banks are waiting for clarification, although banks and other financial institutions are waiting for the government’s clarification regarding this rule, because the financial year has started from April, so how will the transactions done before May 26 be calculated?