For all types of transactions in the financial market, permanent account number (PAN) would henceforth be mandatory. On Friday, finance minister P Chidambaram said that this would be applicable subject to suitable threshold exemption limits. However, the PAN card is already mandatory if you need to invest in a mutual fund or set up a demat account or open a bank account.
Almost all financial market transactions are through cheques, and for opening a bank account one needs a PAN. Market players feel this will not have any major impact on financial transactions. However, it would lead to greater tax compliance.
"The government is focusing on tax compliance than increasing tax rates. It is in line with its attempts to levy tax at the point of sale. Using PAN is an effective tool in this regard,'' said Gaurang Shah, MD, Kotak Life Insurance. "It is much easier to collect data from the 17 odd insurance companies about individuals who are due to pay tax. However, we will still need to see the fine print about how this will be implemented,'' Shah added. In the securities market, however, use of PAN is mandatory and since February 1 Sebi also made it mandatory for all mutual fund investments, as part of the `know-your-customer' (KYC) norms. Earlier the PAN card was necessary for investments above Rs 50,000 crore.
Source: TOI, 01-03-08
