Written in : November 1998

We have discussed more than once in this column the rules being framed by the government making it mandatory for you to quote your Permanent Account Number (PAN) for high value transactions. The intention of doing so is obvious: if you enter into such transactions, you are likely to be having taxable income - and quoting PAN will ensure that you are a taxpayer and that such transactions are included in computing your taxable income.

As such, your applying for a PAN is made compulsory and failure to do so will attract penalty.

The government has now come out with detailed rules that lay down the nuts and bolts of the policy. Let us today understand the rules in detail.

These rules are to be effective from November 1, 1998. That is, you are bound to follow them for all transactions after November 1, 1998.

You are required to quote your PAN or your General Index Register (GIR) Number in all documents pertaining to the specified transactions. A GIR No is necessarily given to you by your assessing officer in his General Index of taxpayers. You don't have to apply for it. However, if you have got a communication from your officer - an order, a notice etc - you will find the GIR No written on it. However, it is just likely that you don't know your GIR No. If so, just ask your officer and he should give it to you.

The following are the type of transactions in whose documentation you are required to quote your PAN or GIR No.

1. Sale or purchase of any immovable property valued at Rs.5 lakhs or more.
2. Sale or purchase of a motor vehicle which requires registration with the RTA.
3. A time deposit of more than Rs.50,000 with any bank. This seems to refer to a single deposit exceeding Rs.50,000.
4. A deposit of more than Rs.50,000 in any account with Post Office Savings Bank.
5. A sale or purchase contract of securities (shares, bonds etc) of more than Rs.10 lakhs.
6. Opening a bank account with a bank. This is interesting - to open a bank account hereafter you will need to quote your PAN.
7. Applying for a phone connection including a cell phone.
8. Payments to hotels and restaurants against their bills of more than Rs.25,000 at one time.

To repeat, if you enter into any of these eight types of transactions, you are required to quote your PAN or GIR No.

You are exempted from quoting your PAN if you:

• have only agricultural income and no other taxable income;
• are a non-resident.

If you have only agricultural income, you are required to fill in Form 61 declaring so instead of quoting your PAN.

If you are an NRI, you shall furnish a copy of your passport instead of quoting your PAN.

Every person who is responsible for the above 8 types of transactions - the bank officer, stock broker, manager of the hotel or restaurant, buyer and seller of property, vehicle etc - is required to ensure that the PAN or GIR No. is duly quoted in the document or a declaration in Form 61 or a copy of the passport is obtained.

That is again interesting and deserves your attention.

Suppose you purchase a second hand motor car. Remember to ensure that the seller has quoted his PAN in the RTA documents which you will get signed by him. It is not the RTA who is required to ensure this. It is you.

Instead of buying, suppose you are selling your car. The rules require you to ensure that the buyer also quote his PAN in the document which he gives you. Thus, both parties to the transaction are required to get the other's PAN quoted.

However, as a buyer he is not required to sign any document except give you a receipt. Is it the receipt, then, which should have the PAN?

So also, whether you are purchasing or selling an immovable property of more than Rs.5 lakhs, and you receive any document, you should ensure that the other party has quoted his PAN.

So, besides exchanging cash against property, you are also required to exchange Permanent Account Numbers hereafter! Strange are the ways of tax.

If you own or manage a hotel or restaurant, for every bill of more than Rs.25,000 you should be ensuring that the customer quotes his PAN.

It does not appear to be possible for you, or even expected of you, to ensure that the party has quoted his PAN correctly or has even identified himself correctly.

Next week we shall discuss some more of this important obligation cast on you by the government.