From tomorrow, May 26th, India's cash withdrawal and deposit mechanism will undergo a shift. Citizens must now provide their PAN (permanent account number) or Aadhaar number when withdrawing or depositing more than Rs 20 lakh from bank accounts, including co-operative banks and post offices, in a single financial year, according to the Centre. According to a letter issued by the Central Board of Direct Taxes earlier this month, the same regulations will also apply when creating a current account.
"Every person shall quote his permanent account number or Aadhaar number, as the case may be, in documents pertaining to such transaction when entering into a transaction specified in column (2) of the Table below, and every person specified in column (3) of the said Table, who receives such document, shall ensure that the said number has been duly quoted and authenticated," the CBDT said in a notice dated May 10.
In columns 2 and 3, it is stated where the rules would apply and how those who get PAN and Aadhaar numbers must guarantee that they are authenticated.
Previously, a PAN card was only necessary when depositing cash in excess of Rs 50,000 in a single day, but there was no yearly restriction for cash deposit or withdrawal as per Rule 114 B. Aside from that, the limit only applied to deposits made in a bank.
"The permanent account number or Aadhaar number of an individual, together with demographic information or biometric information, shall be submitted to the Principal Director General of Income-tax (Systems) or the Director-General of Income-tax (Systems) or the person authorised by the Principal Director General of Income-tax (Systems) with the approval of the Board, for the purposes of authentication referred to in section 139A," the law continues.
Section 139A identifies the individuals or transactions that must apply for and quote a PAN. It has delegated this to the Central Government since it could not cover all types of people and transactions. As a result, CBDT can prescribe such transactions and individuals. The CBDT has prescribed cash deposits and withdrawals of more than Rs. 20 lakhs through a bank or post office, as well as the opening of a current account or cash credit account, as specified transactions for applying for a PAN, in this circular.