PAN intimation,

AIR reporting& recent changes in TCS

D K Bholusaria

dk@bholusaria.com

Today’s Goal !

Understanding background

Section 139A(5) and 285BA(1)

Rule 114B~114E

Changes as compared to previous requirements

Changes in section 206C

Penalties for default

Discussion and open house

Background

Government is committed to curb the circulation of black money and widening of tax base

Recommendations of the Special Investigation Team (SIT) on

Black Money.

New rules are expected to be useful in widening the tax net

by non-intrusive methods.

Expected to help in curbing black money and move towards

a cashless economy.

(source: Press Information Bureau)

Who is required to have PAN?(Section 139A(1))

All persons -

if Total Income > Threshold limit

Company and Firms – Mandatory from day 1

Individuals and HUFs – more than 2.5 / 3 / 5 lacs

if in business, turnover > 5 lacs in any

previous year

if required to furnish return u/s 139(4A)

Form ITR7

Section 139A(5)(c)

139A. Permanent Account number

…

(5) Every person shall—

…

(c) quote such number in all documents pertaining to such transactions as may be

prescribed* by the Board in the interests of the revenue, and entered into by him:

Provided that the Board may prescribe different dates for different transactions or class of transactions or for different class of persons

…

* Rule 114B~114D and form 60 and 61

Section 139A(6)

139A. Permanent Account number

…

(6) Every person receiving any

document relating to the transaction

prescribed under clause (c) of sub-

section (5) shall ensure that the

permanent account number or the

General Index Register Number has

been duly quoted in the document.

Section 285BA(1)Obligation to furnish statement of financial transaction or

reportable account.

(1) Any person, being—

… long list…

who is responsible for registering, or, maintaining books of account

or other document containing a record of any specified financial

transaction or any reportable account as may be prescribed,

under any law for the time being in force,

shall furnish a statement* in respect of such specified

financial transaction or such reportable account which is

registered or recorded or maintained by him and information

relating to which is relevant and required for the purposes of thisAct, to the income-tax authority or such other authority or agency

as may be prescribed*.

* Rule 114E and form 61A

Rule 114B~114D

Transactions where PAN is to be quoted in

all documents u/s 139A(5)(c)

As an overview, the new rules

primarily provide for the following:

List of PAN reportable and monetary threshold

for such reporting transactions (Rule 114B);

List of specified persons responsible to ensure

PAN is duly quoted or in absence of PAN, a

declaration in Form 60 complete details is

furnished (Rule 114C);

Mode and manner of furnishing by certain

specified persons of half yearly statements

containing particulars of declarations received in

Form 60 (Rule 114D)

Sl# Nature of transactions Old New / Changes

1 Motor vehicles

(other than two

wheelers)

All sales/purchases No change

2 Opening an account with

a banking company.

(other than time deposit)

All new accounts.

(Co-op banks not covered

earlier)

No change except:

- Basic Savings Bank Deposit

Account excluded

- Co-operative banks added

3 Credit card Application to banking

company / any other

company / institution for

credit card

No change.

Co-operative banks also to

comply.

4 Opening of demat

account

No such requirement in old

rule

With a DP, custodian of

securities (escrow accounts) or

any other person registered u/s

12(1A) of the SEBI Act

5 Hotel / restaurant bill(s) > Rs.25,000/- at any one

time by any mode of

payment

Limit changed to Rs. 50,000/-.

Mode changed to CASH.

PAN Intimations

Sl# Nature of transactions Old New / Changes

6 Foreign travel Cash payment in connection

with foreign travel of an

amount exceeding

Rs.25,000/- at any one time

(including fare, payment to

travel agent, purchase of

forex) excluding Haj Travel

Limit increased to Rs. 50,000/-

All kinds of foreign travel

including Haj

7 Purchase of Mutual fund

units from Mutual funds

≥ 50,000/- for purchase > 50,000/- for purchase

8 Debentures/ bonds

issued by company /

institution

No separate requirement in

old rule

> 50,000/- for purchase

9 Purchase of RBI bonds No separate requirement in

old rule

> 50,000/- for purchase

PAN Intimations

Sl# Nature of transactions Old New / Changes

10 Cash deposit with

banking

company

≥ Rs.50,000/- or more

during any one day

(Co-op banks not covered)

> Rs.50,000/- during any one day

Co-op Banks included

11 Cash purchase of

bank drafts/ pay

orders/ banker's

cheques

≥ Rs.50,000/- or more

during any one day

(Co-op banks not covered)

> Rs.50,000/- during any one day

Co-op Banks included

12 Time deposit > Rs.50,000/-

with a banking company

(single deposit) (any mode)

i. Deposits with Co-op banks,

Post Office, Nidhi, NBFC

companies will also need PAN;

ii. Deposits aggregating to more

than Rs.5 lakh during the year

will also need PAN

13 Payment for prepaid

instruments issued

under Payment &

Settlement Act

(Eg., open wallet)

No separate requirement in

old rule

Rs.50,000/- during any one day

- Co-op Banks included

- Mode of payment: Cash / DD /

Banker Cheque / PO. Cheque /

Net banking / NEFT / RTGS /

IMPS excluded.

PAN Intimations

Sl# Nature of transactions Old New / Changes

14 Life insurance

premium

No separate requirement in

old rule

> 50,000/- per financial year

15 Sale or purchase of

securities (other than

shares)

Contract for sale / purchase

of a value exceeding Rs.1

lakh per transaction

"Shares" excluded now.

16 Sale or purchase of

Shares of Unlisted

Company

No separate requirement

in old rule

> 1 Lakh per transaction

17 Sale or Purchase of

Immovable property

Valued at Rs.5 lakh or

more

i. Sale/ purchase exceeding

Rs.10 lakh;

i. Properties valued by Stamp

Valuation authority at amount

exceeding Rs.10 lakh will also

need PAN.

18 Purchases or sales

of goods or

services

No separate requirement

in old rule

Purchase/ sale of any goods

or services exceeding Rs.2

lakh per transaction.

PAN Intimations

Certain transactions deleted / merged

Purchase of new shares of a company

Deposit with Post Office Savings Bank

Installation of telephone / cell phone

connections

Purchase of jewellery / bullion

Expanded scope of Form 60

Additional Info:

A. number of other joint parties involved in the

transaction

B. mode of payment

C. the PAN application number, if applied for

D. estimated total income of the declarant, if

PAN is not applied for

E. A verification stating that he does not possess

a PAN and that his estimated total income is

below taxable threshold

Changes in exempt categories

Old Rule New Rule

a) Non-residents (NR);

b) Central Government, State

Government and Consular

Offices in transactions where

they are the payers.

c) Persons who have agricultural

income and are not in receipt

of any other taxable income

a) NRs will now need to furnish PAN

(or form 60) for certain

reportable transactions*

b) Government (Central as well as

State) and Consular offices

continue to be exempted from

all PAN reportable transactions

whether they are payers or

otherwise.

c) Persons earning agricultural

income (without any other

taxable income) are now

required to file a declaration in

new Form 60 itself (instead of

old Form 61).

*Export transactions still exempted

Duty of person accepting declaration /

PAN info

Obliged to verify compliance of PAN reporting

Obliged to verify that PAN provided is correct

Obtain form 60 is PAN not furnished.

Shall not accept form 60 where the amount of

income (other than agricultural income)

mentioned in column of estimated total

income in Form 60 exceeds the taxable

threshold unless PAN is applied for by the

declarant.

E-filing of form 60 (as form 61)

Old Rule required every person receiving Form 60 to

forward hard copy thereof to the jurisdictional Tax

Authority on 6 monthly basis.

Instead, now 6 monthly e-filing of particulars thereof

along with details of relevant PAN reportable

transactions in new Form 61 made mandatory.

Hard copy of form 60 to be maintained for 6 years

starting from date of receiving.

E-filing of new Form 61 does not apply to persons:

issuing bills in relation to transactions of hotel payments,

foreign travel and sale of any other goods/ services if such

persons are not under obligation to get their accounts

audited under section 44B.

E-filing of form 60 (as form 61)

To be submitted with:

Joint Director / Director of Income-tax (Intelligence and CriminalInvestigation)

Due dates:

1. Half year ending September 30:October 31st

2. Half year ending March 31: April30th

E-filing of form 60 (as form 61)

You need to register and obtain ITDREIN on e-filing

portal (one time process).

ITDREIN shall be something like: AEKPB1212D.ZZ390

ITDREIN to be generated separately for each type of

form … 61, 61B, 15CCC.

Utility to file form 61 already launched by

government.

ITDREIN shall be your user id to upload form 61

Rule 114E

AIR reporting

AIR reporting

PAN reporting compliance on individual transactions

is complemented by AIR obligation for persons who

are obligated to verify PAN reporting compliance.

AIR involves furnishing of information to Tax Authority

on annual basis.

Apart from PAN reportable transaction, scope of AIR

obligation also extends to certain additional

financial transactions like cash withdrawals from

bank accounts, credit card transactions etc.

The new Rules have modified scope of AIR and

monetary thresholds for transactions subject to AIR

AIR Significant changes - AdditionsNature of Financial Transactions Specified class of persons

(reporting persons)

Purchase of bank instruments:

i. Purchase of bank drafts/ pay orders/ banker’s cheque

in cash aggregating ≥ Rs.10 lakhs in a financial year

ii. Purchase of pre-paid instruments issued by RBI under

Payment and Settlement Systems Act in cash

aggregating ≥ Rs.10 lakhs during the financial year

Cash deposit / withdrawal* in current account:

i. Cash deposits OR cash withdrawals (including through

bearer’s cheque) aggregating ≥ Rs. 50 lakh in a

financial year, in or from one or more current account of

a person.

I. A banking company; or

II. A co-operative bank

Cash deposits in other accounts:

Cash deposits aggregating ≥ Rs. 10 lakhs in a financial

year, in one or more accounts (other than current account

and time deposits) of a person

I. A banking company; or

II. A co-operative bank

III. Post Master General as

per Indian Post Office Act

* Cash deposits and cash withdrawals limits to be computed independently

AIR Significant changes - Additions

Nature of Financial Transactions Specified class of persons

(reporting persons)

Time Deposits:

One or more time deposits aggregating ≥ Rs. 10 lakhs in a

financial year (other than a time deposit made through

renewal of another time deposit)

I. A banking company;

II. A co-operative ban

III. Post Master General as per Indian Post

Office Act

IV. Nidhi company

V. NBFC registered with RBI to hold public

deposits

Buy back of shares:

Buy back of shares from any person for amount or value

aggregating ≥ Rs. 10 lakhs in a financial year (other than

the shares bought in the open market)

A listed company undertaking buy back

of its shares as per Indian Companies Act

Sale of foreign currency by Authorised Person:

Receipt of funds from any person for sale of foreign

currency by Authorised Person including any credit of such

currency to foreign exchange card or expense in such

currency through a debit or credit card or through issue of

travellers’ cheque or draft or any other instrument of an

amount aggregating ≥ Rs. 10 lakhs during a financial year.

Authorised person under Foreign Exchange

Management Act

AIR Significant changes - Additions

Nature of Financial Transactions Specified class of persons

(reporting persons)

Cash sale of goods/ services:

Receipt of cash payment > Rs.

2 lakhs for sale of goods or

services

(not specifically covered under

any other categories of new rule

discussed above)

Person (seller) liable for

audit under section 44AB

AIR - changes in monetary limits

Nature of Financial transaction

Earlier limit New limit

Credit card payments Payments aggregating to

≥ Rs. 2 lakhs in a

financial year

Payments (in respect of one or more

cards) aggregating to:

1. ≥ Rs. 1 lakh in cash

2. ≥ Rs. 10 lakhs by any other mode in

a financial year

Receipt from any person

for acquisition of bonds/

debentures issued by

company/ institution

(primary subscription)

≥ Rs. 5 lakhs Amount aggregating to ≥ Rs. 10 lakhs

in a financial year [Other than the

amount received on renewal of bond/

debenture]

Receipt from any person

for acquiring shares

issued by a company

(primary subscription)

≥ Rs. 1 lakh

(public or rights issue)

(share application

excluded)

(private placement

excluded)

Amount aggregating to ≥ Rs. 10 lakhs

in a financial year

- share application money included

- Private placement included now

AIR - changes in monetary limits

Nature of Financial

transaction

Earlier limit New limit

Receipt from any person

for acquiring units of a

Mutual Fund

≥ Rs. 2 lakhs Amount aggregating to ≥ Rs. 10 lakhs

in a financial year

[Other than amount received on

account of transfer of funds from one

scheme to another scheme of that

Mutual Fund]

Purchase or sale of

immovable property

≥ Rs. 30 lakhs as per

agreement

≥ Rs. 30 lakhs as per agreement or as

valued by stamp duty authority

AIR reporting – other changes

The new Rule provides clarifications on aggregation for

computing the monetary thresholds for AIR (e.g. in case of joint

holding in any account or transaction, same information shall

be furnished for all joint holders)

AIR return to be furnished exclusively online under DSC. Only

exception is for Post Master General and Registrar/Inspector

General, who may furnish return in floppy/CD/DVD

The time limit for furnishing AIR has been preponed to 31 May(instead of 31 August) immediately following the relevant

financial year.

Changes in TCS

Sec 206C(1D) (after proposed changes)

(1D) Every person, being a seller, who receives any amount in

- cash as consideration

- for sale of bullion or jewellery or

any other goods (other than bullion or jewellery) or providing any service,

shall, at the time of receipt of such amount in cash, collect from thebuyer, a sum equal to one per cent of sale consideration as income-tax, ifsuch consideration,—

(i) for bullion, exceeds two hundred thousand rupees; or

(ii) for jewellery, exceeds five hundred thousand rupees; or

(iii) for any goods, other than those referred to in clauses (i) and (ii), or anyservice, exceeds two hundred thousand rupees:

Provided that no tax shall be collected at source under this sub-section on any amount on which tax has been deducted by the payer under Chapter XVII-B

Changes in section 206C w.e.f 1st June

Section 206C(1): 1% TCS to be collected on sale of

Motor Vehicle valuing more than 10 lacs (at the time

of receipt of consideration)

Section 206C(1D)(iii):

1% TCS to be collected

at the time of receipt of amount in cash as

consideration; and

Sale consideration (sale value) > 2 lacs for

sale of all goods (other than Bullion or Jewellery); or

providing any services

Sub-section 1D not to apply where TDS is deducted

Section 206C(1E): Certain exceptions to new section

206C(1D)(iii) to be provided by way of rules

Certain issues relating to TCS

Is TCS applicable only when the entire sale

consideration is in cash?

Does receipt of bearer cheque or cheque which is

crossed without the words “account payee”

amount to receiving consideration in cash?

Are TCS provisions applicable in case of barter

exchange?

Is the threshold limit transaction-wise or in

aggregate?

Memoradum to finance bill 2016

In order to reduce the quantum of cash transaction

in sale of any goods and services and for curbing

the flow of unaccounted money in the trading

system and to bring high value transactions within

the tax net, it is proposed to amend the aforesaid

section to provide that the seller shall collect the

tax at the rate of one per cent from the purchaseron sale of motor vehicle of the value exceeding

ten lakh rupees and sale in cash of any goods

(other than bullion and jewellery), or providing of

any services (other than payments on which tax is

deducted at source under Chapter XVII-B)

exceeding two lakh rupees.

Penalties for non-compliance

Penalties

Section 271FA: Failure to file AIR return

Non compliance to sec 285BA(1) – Rs. 100 per day

Non compliance to sec 285BA(5) – Rs. 500 per day

Section 272B: Non compliance of section 139A / 139A(5) – Rs.10,000

Section 271CA: Non collection of TCS - 100% of amount of TCS

Section 271H: Non filing of TCS return – Rs. 10K ~ 100K

Questions?

Thanks for your valuable

time ! !