Budget 2023: PAN card may not be required for THESE transactions soon-- Details inside

File Photo

New Delhi: The Finance Ministry is anticipated to propose eliminating the need to present a Permanent Account Number (PAN) card for financial transactions supported by Aadhaar in the upcoming Union Budget 2023–24. The action aims to streamline regulations in response to banks' and financial organisations' requests. Since the majority of accounts are already seeded with Aadhaar, some banks have petitioned the government to remove the PAN requirement.

According to a government official with knowledge of the situation, the administration has received representations in this respect and is currently inspecting them. According to Section 206AA of the Income Tax Act, financial transactions where a PAN is not provided are currently liable to 20 percent Tax Deducted at Source (TDS), even if the applicable rate is lower. ()

Some banks want the Income Tax Act to be changed in order to eliminate the confusion and needless duplication that the current system causes. ()

According to banks, Aadhaar numbers are pre-populated into practically all individual accounts. They add that customers may provide an Aadhaar number rather than a PAN card for some transactions under Section 139A(5E) of the Income Tax Act.

The official added that a future clarification on the topic might provide a lower threshold below which PAN might not be necessary. According to the newspaper, the official further stated that Section 206AA prevents tax avoidance by entities or people who fail to provide their PAN cards in specific transactions and guarantees that the TDS is applied at the correct rate.

The matter's clarification is expected to be helpful for those who are exempt from the PAN requirement but may still be subject to larger tax deductions in certain transactions.