Govt to soon make PAN must for cash spending beyond a limit

Govt to soon make PAN must for cash spending beyond a limit

To check generation of domestic black money, the government will soon make it mandatory to furnish PAN card details for cash transactions beyond a certain threshold, Finance Minister Arun Jaitley said today.

"The government is at an advanced stage in considering the requirement of furnishing PAN card details if cash transactions beyond a certain limit are undertaken," Jaitley said in a Facebook post.

He said the monitoring regime of the income tax department has been strengthened and its capacity to access information and apply technology driven analytical tools to expose evasion, has been enhanced.

"Its ability to detect large cash withdrawals, or large cash transactions which enter the system, is being strengthened. GST regime once introduced will also be a landmark step in this direction.

"Thus for commodities like gold where the initial purchase by the exporter is after the payment of custom duty, the subsequent transactions which are mostly in cash, can easily be found out," Jaitley said.

In 2015-16 Budget, the Finance Minister had proposed making quoting of Permanent Account Number (PAN) mandatory for all sale and purchase of over Rs 1 lakh.

"Quoting of PAN is being made mandatory for any purchase or sale exceeding the value of Rs 1 lakh. The third party reporting entities would be required to furnish information about foreign currency sales and cross border transactions," Jaitley had said.

Thereafter, the government had received representations from various persons, including MPs, MLAs, trade and industry associations among others, against the proposed mandatory quoting of PAN for sale or purchase in excess of Rs 1 lakh.

Stressing that bulk of black money is still within India, Jaitley said there was a need to change the national attitude so that plastic currency becomes the norm and cash an exception and the government is working with various authorities to incentivise this change.

"Being seized of this problem, the government has been working with various authorities in order to incentivise this change. The opening of a large number of payment gateways, internet banking, payment banks and the emerging reality of e-commerce will prompt the use of banking transactions and plastic money rise significantly," Jaitley said.

The JAM (Jan Dhan, Aadhaar, Mobile) Trinity and the Direct Benefit Transfer of subsidies to the accounts of beneficiaries of various government schemes will also be a step ahead in this direction, Jaitley added.

Each of the 18 crore beneficiaries of Jan Dhan accounts has been provided with RuPay cards, which will encourage them to use plastic currency and get familiarised with it, he said.

The MUDRA Yojana, over the next few years, has a target of 6 crore families out of 25 crore families in India to become entrepreneurs.

Loans being made available to them by the banks can only be withdrawn from the ATMs by use of MUDRA credit cards which are being provided to them. More and more of their transactions will be through plastic currency or through the banking channel, Jaitley added.

The Finance Minister said over the years India has slowly started moving towards moderate rates of taxation.

"It has been a conscious strategy of the NDA Government to put more money in the pockets of middle and low income groups by raising exemption limits and incentivising savings through fiscal policy.

This will encourage consumption and bring more money into the system. Consumption increases the volumes of indirect taxation," he said.
Jaitley said to make India more investment friendly destination, the government is committed to lowering of corporate tax rate to 25 per cent over the next four years and also phase out exemptions.

"The Government's policy is rationalisation of tax structures, taxing at reasonable rates, placing more money in the hands of small earners, encouraging and promoting the use of plastic money by all sections of society and creating deterrence against those who continue to use unaccounted money," Jaitley said.

In its campaign against black money stashed abroad, he said the government has formulated a conscious strategy to deal with the menace of black money and the first cabinet meeting of the NDA government implemented the direction of the Supreme Court to constitute Special Investigation Team to monitor efforts against black money.

"The UPA Government had tried to evade the Supreme Court direction on one pretext or the other for over three years. The Government swung into action and accelerated all the income tax assessments against those with regard to whom information about holding illegal money abroad in Lichtenstein and in the HSBC bank at Geneva, were available," he added.

"Most assessments have been completed and wherever illegalities are being found, criminal prosecutions have been launched against beneficiaries of these bank accounts," Jaitley said.

In order to encourage international cooperation in the matters of tax evasion, Jaitley said the government has taken a series of steps.

"The Prime Minister took the initiative at the G-20 meeting in order to bring about international cooperation in tackling unlawful assets held by the residents of one country in foreign soil. The G-20 initiative is intended to lift the veil of secrecy in banking transactions and in real time inform domestic taxation authorities about transactions of their citizens internationally."

The government has signed an understanding with the US under FATCA wherein the United States and India would disclose to each other any real time transaction in accounts with financial institutions, by its citizens in foreign territories.

This cooperation would also extend to all those countries which would become signatories to global standards on Automatic Exchange of Information being developed under the mandate of G20.

Further, the Revenue Secretary led a team of Indian officials and has held extensive discussions with Swiss authorities. Discussions have also been held at the ministerial level.

"Switzerland has agreed to provide India with proof relating to several HSBC accounts where India can give some evidence over and above the stolen data, which was delivered to India through France.

It is expected that over the next two years this international cooperation will be worked out and information with regard to illegal assets held abroad, subject to certain conditions, would be available to each of the demanding nations.

"Thus, those with illegal assets abroad, who have failed to make declaration, would now stand the risk of information relating to them eventually reaching the Indian taxation authorities," Jaitley said. 

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