The Income Tax Department (ITD) of India has implemented various rules to streamline the tax collection process and curb tax evasion. One such rule is Rule 114B of the Income Tax Rules, 1962. This rule mandates quoting your Permanent Account Number (PAN) for specific high-value financial transactions. By tracking these transactions, the ITD can monitor financial activities and deter tax evasion.
What is Rule 114B?
Rule 114B applies to specific high-value financial transactions where you must provide your PAN. This helps the ITD track these transactions and identify any potential tax discrepancies. Here is a table summarising the applicability of Rule 114B.
All mentioned transactions under Rule 114B
Sl. No. |
Nature of said transaction |
Value of said transaction |
1 |
Purchase or sale of a motor vehicle (except two-wheeled vehicles) requiring registration under the Motor Vehicles Act, 1988 (Chapter IV). |
All such transactions |
2 |
Opening an account (except fixed deposits and Basic Savings Bank Deposit Accounts) with a banking company or co-operative bank to which the Banking Regulation Act applies. |
All such transactions |
3 |
Applying for a debit or credit card with a banking company, co-operative bank, or other institution governed by the Banking Regulation Act of 1949. |
All such transactions |
4 |
Opening a demat account with a registered depository participant, custodian, or securities entity regulated by SEBI. |
All such transactions |
Other transactions under Rule 114B
Sl. No. |
Nature of said transaction |
Value of said transaction |
1 |
Deposits with post offices or co-operative banks to which the Banking Regulation Act applies. |
Cash deposits exceeding Rs. 50,000 in one day or exceeding Rs. 2,50,000 between November 9, 2016, and December 30, 2016. |
2 |
Purchase of pay orders, bank drafts, or banker’s cheques from a banking company or co-operative bank. |
Cash payment exceeding Rs. 50,000 in one day. |
3 |
Time deposit with post offices, co-operative banks, or banking companies, including NBFCs and Nidhis registered under the RBI Act or the Companies Act. |
Amount exceeding Rs. 50,000 or aggregates to over Rs. 5 lakh in a financial year. |
4 |
Payment for pre-paid instruments issued under RBI guidelines, to banks or co-operative banks. |
Payment exceeding Rs. 50,000 in a financial year. |
5 |
Life insurance premium payments. |
Premiums exceeding Rs. 50,000 in a financial year. |
6 |
Purchase or sale of securities, other than shares. |
Transactions exceeding Rs. 1 lakh. |
7 |
Purchase or sale of unlisted company shares. |
Transactions exceeding Rs. 1 lakh. |
8 |
Purchase or sale of immovable property. |
Transactions exceeding Rs. 10 lakh or the value determined by stamp valuation authority. |
9s |
Purchase or sale of goods and services, other than those mentioned above. |
Transactions exceeding Rs. 2 lakh. |
The provisions of Rule 114B will not apply to the following persons
- State Government, Central Government, and Consular Offices.
- Non-residents as defined under the Act, for transactions other than those mentioned in Sl. No. 1, 2, 4, 7, 8, 10, 12, 14, 15, 16, 17 of the above table.
- A person who holds an account (other than a fixed deposit or a basic savings account) with a banking company or co-operative bank governed by the Banking Regulation Act, 1949, and has not provided their PAN or Form No. 60 at the time of account opening must furnish the necessary documents according to Rule 114C.
