PAN cards may not be required for certain financial transactions from the coming financial year as the upcoming Budget 2023-24 proposes to do
away with the requirement of showing a Permanent Account Number (PAN) card for financial transactions backed by the central government. It is likely to.
The purpose of this move of the Finance Ministry is to simplify the rules as per the demand of financial institutions and banks.
Almost all accounts are linked with Aadhaar
Recently, some major banks in the country urged the central government to do away with the requirement of PAN as most accounts are already linked with Aadhaar.
A source related to the development of the case told The Economic Times that the government had received representations in this regard, and they are being inspected.
As per section 206AA of the Income Tax Act, financial transactions where PAN is not provided are subject to Tax Deduction at Source (TDS) of 20%, even if the applicable rate is lower.
What is the opinion of the banks?
Some central banks want the Income Tax Act to be amended to avoid unnecessary duplication and confusion caused by the present system.
In this regard, banks think that almost all individual accounts are linked to an Aadhaar number and argue that section 139A(5E) of
the Income Tax Act allows users to furnish an Aadhaar number instead of a PAN card for certain transactions.
According to banks, the Aadhaar number is practically pre-loaded in all personal accounts.
They say that customers can provide an Aadhaar number instead of a PAN card for certain transactions under section 139A(5E) of the Income Tax Act.
