Written in : November 1998

In the last article, we discussed the various transactions which require quoting of the Permanent Account Number or GIR No. by the parties to a transaction. We also discussed that such quoting is not required if the person transacting has only agricultural income and no other income, or is a non-resident.

If you have only agricultural income and no other taxable income, you are required to give a declaration to the other party to the transaction that such is the case. This declaration is in Form 61.

The declaration in Form 61 requires you to declare (together with other information) as under:

"I hereby declare that my source of income is from agriculture and I am not required to pay income-tax on any other income, if any."

Besides this simple declaration, you have to give your name and address. What is interesting is that you are also required to produce documents supporting your address. The documents that you may produce to support your address may be: Ration Card; Passport; Driving Licence; Identity Card issued by any institution; Copy of electricity bill or telephone bill showing residential address; Any document or communication issued by any authority of Central or State Government or local bodies showing residential address; or Any other documentary evidence in support of the address given in the declaration. This again is interesting. It means each party receiving the declaration is also required to see the document produced and ensure that the address written is correct.

Now, suppose you host a party in a 5-star hotel. You end up with a hefty bill. You tell the hotel that you have only agricultural income and none else and so don't have a PAN. The government does not want you to get away with a simple declaration - it wants a way to cross check with you. So, the hotel will ask for proof of address as required by the Rules.

There is, of course, no specific requirement that the documents should be copied and kept with the declarations. The Rules only require production, nor attaching copies. That is sensible since keeping copies of passports or other documents is piling up paper work.

Suppose you don't have a PAN or a GIR No and are about to enter into a PAN-quotable transaction. What do you do? There may be two situations: you have applied for a PAN and have not yet been allotted one and you don't know your GIR No; or you don't have a PAN/GIR No. because you don't need to apply for one - you are not required to have a PAN if you don't have taxable income.

In such situations, you don't have to rush to the income-tax department and get a PAN. The Rules provide for this.

If you make payment by cash or 'otherwise than by a crossed cheque or draft' for any of the 8 types of transactions, you should make a declaration in Form 60 and give the required particulars.

The declaration requires that you offer your name and address and also produce, as with Form 61, evidence of your address. It also requires you to specify the following:

• whether you are assessed to tax;
• if assessed to tax, the designation of the officer with whom you filed your last return of income;
• if assessed to tax, the designation of the officer with whom you filed your last return of income;

If you noticed, this declaration is not required if you make a payment by a crossed cheque or draft - only if the payment is made otherwise. The intention seems to be that if payment is made by crossed cheque or draft, it would be easy to trace you or track the transaction back to you.

A minor may not have a PAN because he does not have taxable income. What happens when a minor enters into one of the 8 types of transactions?

According to the Rules, if a minor desires to open a bank account, he is required to offer his parent's (with whose income his income is clubbed) PAN/GIR No.

The Rules are silent on other types of transactions. I presume he files Form 61 in such cases, signed by his parent, of course.

You sell a house property, or a motor car, or enter into any of the 8 types of covered transactions and ask the other party to quote his PAN. He quotes his PAN or offers you a declaration. What do you do with the information?

You give it to the income-tax department, of course. You are required to give the department a statement indicating details of all documents pertaining to any of the 8 types of transactions where a PAN or GIR No. is quoted.

The statement should contain:

• name and address of the person entering into the transactions;
• nature and date of the transaction;
• amount of each transaction;
• PAN or GIR No. quoted in the documents.

Besides you are also to file copies of declarations in Form 60 or 61 received by you and also copies of the passports you receive from non-residents.

How often are you required to file such declarations? The Rules don't say anything as yet. You do it, at least, once a year, I would say.

What do these Rules mean for us?

Firstly, it means we get a PAN if we ought to.

Secondly, we remember the 8 types of transactions. Many of these are only occasional transactions and we might just forget about these Rules when we enter into them.

Thirdly, we quote, and get quoted, PAN in all such transactions.

Fourthly, we offer or obtain declarations where required, evidence of residence and copies of passports from non-residents.

Fifthly, we keep a record of such transactions.

Lastly, we file these with the income-tax department.

There are some interesting developments on the Kar Vivad Samadhan Scheme side.

The Delhi High Court has held a part of the Scheme ultra vires, ie, unconstitutional.

The department has taken a view that not always should payment be adjusted first toward tax and then toward interest. In some cases, it says, part payment should first be adjusted toward interest. This works against the taxpayer.

In detail about these and other issues in the next article.