The upcoming budget may waive the citation requirement Permanent Account No (PAN) if for certain financial transactions Aadhaar Available as financial institutions are suing for simplified rules.
Banks have approached the government saying that PAN number is not required as the accounts are linked with Aadhaar. An informed official said, “We have received petitions in this regard and they are being examined.
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Currently, if the PAN number is not provided, 20% is levied as per Section 206AA on a transaction which is exempt from tax at source. Income Tax ActAlthough the matching rate is low.
Some lenders have suggested amendments to the Income Tax Act as the existing duality leads to unnecessary complications in conducting banking business.
For individuals, lenders pointed out that almost all bank accounts are already linked with Aadhaar numbers and under Section 139A(5E) of the Income Tax Act, they are allowed to quote Aadhaar instead of PAN for certain specified transactions.
“The clarification may come in the form of a specific prescribed threshold, for transactions below that threshold, the PAN number will not be required,” the official said.
He said Section 206AA is intended to confirm that TDS Proportionately used to prevent tax evasion by individuals or companies who do not have a PAN or do not mention their PAN in certain transactions.
Experts said a clarification would benefit individual taxpayers, who are otherwise not required to obtain PAN but face higher tax deductions while making certain transactions.
This includes new bank account holders and those whose income is below the taxable limits.
“A person whose income is below the taxable limit like a domestic worker or a pensioner, if he does not get a PAN, he faces this problem and in some cases, a higher tax exemption rate depending on the nature of the transaction,” said Vikas Vashal, National Managing Partner, Tax, Grand Thornton Bharat LLP. said.
A bank executive said that since Aadhaar is used as an ‘address proof’, any explanation regarding its widely acceptable and interchangeable use will benefit all stakeholders, including individuals.