Come January 1, it will be compulsory to quote tour Permanent Account Number on tax challans, as no tax payment will be accepted by banks without PAN.
But other than for paying tax, you will require to quote your PAN for a host of other things soon.
When will you need to quote PAN?
Whenever you buy high-value goods, which could range from an automobile to an expensive designer dress to that fabulous crystal chandelier, you will have to carry your PAN card.
You will need to quote your PAN every time you buy something that costs Rs 50,000 or more.
If your credit card payments are over Rs 2 lakh (Rs 200,000) in a year, you will be the taxman's target.
If your investments in bonds and debentures are over Rs 5 lakh (Rs 500,000), investment in mutual funds are over Rs 2 lakh and you have bought shares worth over Rs 1 lakh (Rs 100,000), then again you will come under the tax scanner.
PAN is must now for. . .
Currently, if you buy a house or plot of land or a car for more than Rs 500,000 (Rs 5 lakh), it is necessary for you to quote your PAN.
Other than that, if you buy or sell shares or bonds worth Rs 10 lakh (Rs 1 million) or more, or deposit Rs 50,000 or more in a bank FD (fixed deposit) account or a post office savings account, you are asked for your PAN.
Why do you need to give your PAN
The finance ministry is planning to expand its tax base, i.e. is wants more and more people to pay income-tax. At present, the salaried class feels that it is the only category of workers who is not spared the tax burden, while a lot of 'other people' manage to get away with low taxes despite having high earnings.
Currently, of the total 36 million taxpayers, only about 80,000 show a taxable income of over Rs 10 lakh a year.
The government feels that its latest move will help get a lot of big spenders (who, currently, are not paying adequate tax) into the tax net.
The plan is simple: to keep track of individuals who spend a lot. Especially, the big expenses made by the non-salaried class of people.
What good is money if you can't spend it on things you need? Ergo, pay tax if you want to be able to buy those high-value items that are the neighbours' envy.
When will this become compulsory?
In the forthcoming Budget, the finance ministry plans to amend the income-tax rules (Rule 114B) so as to pave the way for this new regulation which makes it compulsory for you to give your PAN when you make any high-value purchase.
So the new rules might come into effect as early as April 1, 2005.
Does this have anything to do with the AIR?
Yes, to an extent.
To check tax evasion, high-value transactions like purchase of property beyond Rs 30 lakh (Rs 3 million) and savings deposits of over Rs 10 lakh (Rs 1 million) will now come under income-tax department's scanner with the government making it mandatory for registrars and banks to file annual information returns (AIR) on such transactions this year.
But if you thought that you will have to keep a record of any high-value purchase you make and will have to attach it along with your next income-tax return, you need not worry. Individual taxpayers need not file the AIR.
AIR will have to be filed by banks, mutual funds, companies issuing shares as well as debentures, credit card providers, registrars and the Reserve Bank of India.
For example, the registrar of immovable property will have to file information returns. Likewise, your car dealer will furnish AIR to tax authorities when you buy a vehicle.
The Tax Information Network will receive the AIR for digitisation, and this will be matched with the income-tax returns filed by individuals.
What if you do not have a PAN yet?
Well, apply for one. A 'tatkal' service for the allotment of Permanent Account Numbers has been launched by the income-tax department.
Herein, taxpayers can file applications online to obtain a PAN and even make the payment for the same through credit cards.
The government says that with this initiative -- and the UTI Investors Ltd and the National Securities Depository Ltd already helping allot PAN -- applicants should be able get their PAN in a fortnight or 20 days.
Even though the government seems quite optimistic about issuance of PAN in double-quick time, it is anybody's guess how long would that 20-day period stretch to.