TAX TALK-24.07.2017-THE HITAVADA
TAX TALK
CA. NARESH JAKHOTIA
Chartered Accountant
There are number of transaction where quoting of PAN is mandatory. One such transaction is sale/service transaction if transaction value exceeds Rs. 2 Lakh..
Quoting of PAN is mandatory if transaction value exceeds Rs. Rs. 2 Lakh
Query 1]
Whether it is mandatory to obtain he PAN if we sale the goods above Rs. 50,000/- in cash to any person? Whether the TDS/TCS is also required if the cash transactions is carried out in respect of this? Whether the PAN would be mandatory if we sale the goods on credit but received the payment exceeding Rs. 50,000/- in cash thereafter? It is mentioned in the last issue of Tax Talk dated 17th July 2017 that the amount exceeding Rs. 2 Lakh cannot be accepted in cash from 01.04.2017. Is it possible to accept the same in cash in respect of the good sold prior to 01.04.2017?
Please guide. [anish*****@gmail.com]
Opinion:
“Taxes grow without rain” -Old Jewish Proverb
There are number of transactions wherein quoting of Permanent Account Number (PAN) is mandatory as it enables income tax department to keep a proper track of numerous transactions. Rule 114B of the Income Tax Rules-1962 specified the following transactions wherein quoting of PAN is mandatory:
| S.No. |
Nature of transaction |
Value of transaction |
| 1. |
Sale or purchase of a motor vehicle or vehicle other than two wheeled vehicles. |
All such transactions. |
| 2. |
Opening of bank account [other than a time-deposit
& saving bank account]. |
All such transactions. |
| 3. |
Credit card or Debit card Application |
All such transactions. |
| 4. |
Opening of a demat account |
All such transactions. |
| 5. |
Payment to a hotel or restaurant against a bill |
Payment in cash of an amount exceeding Rs. 50,000/- |
| 6. |
Payment in connection with travel to any foreign country or for purchase of any foreign currency |
Payment in cash of an amount exceeding Rs. 50,000/- |
| 7. |
Payment to a Mutual Fund for purchase of its units. |
Amount exceeding Rs. 50,000/- |
| 8. |
Payment to a company for acquiring debentures or bonds issued by it. |
Amount exceeding Rs. 50,000/- |
| 9. |
Payment to RBI for acquiring bonds issued by it. |
Amount exceeding Rs. 50,000/- |
| 10. |
Deposit with a Bank. |
Deposits in cash exceeding Rs. 50,000/-per day |
| 11. |
Purchase of DD or pay orders or banker's cheques |
Payment in cash for an amount exceeding Rs. 50,000/-per day. |
| 12. |
A time deposit with a bank, post office, Nidhi Companies, NBFC |
Amount exceeding Rs. 50,000/- per day or aggregating to more than Rs. 5 Lakh during a financial year. |
| 13. |
Payment prepaid instruments issued by RBI to a banking Company |
Payment of more than Rs. 50,000/- in a financial year. |
| 14. |
Payment for life insurance premium |
Amount aggregating to Rs. 50,000/-in a financial year. |
| 15. |
Sale or purchase of securities (other than shares) |
Amount exceeding Rs. 1 Lakh per transaction. |
| 16. |
Sale or purchase, of unlisted shares |
Amount exceeding Rs 1 Lakh per transaction. |
| 17. |
Sale or purchase of any immovable property. |
Amount (or valued by stamp valuation authority) exceeding Rs. 10 Lakh |
| 18. |
Sale or purchase of goods or services other than those specified above |
Amount exceeding Rs. 2 Lakh per transaction |
[If any person doing the transactions don’t have PAN, declaration in Form No.60 would be required]
As far as the specific issues raised in the queries are concerned, it may be noted that:
- Obtaining PAN is mandatory only in the cases mentioned above. If any person is selling goods, then PAN would be mandatory if the sale amount per transactions exceeds Rs. 2 Lakh & not Rs. 50,000/- as mentioned in the query.
- There is no restriction on acceptance of Cash exceeding Rs. 50,000/- (but less than Rs. 2 Lakh) in cash. From 01.04.2017, acceptance of an amount of Rs. 2 Lakh or more is prohibited u/s 269ST in the following situations:
(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or occasion from a person.
- The restriction even applies even in respect of sale done before 01.04.2017 i.e., Rs. 2 Lakh or more cannot be accepted against credit sale done prior to 01.04.2017.
- Tax Collection at Source (TCS) was required prior to 01.04.2017 in respect of cash sale exceeding Rs. 2 Lakh. No such TCS is required from 01.04.2017. Further, the requirement to quote PAN is there in respect of all if the sale/ service amount per transactions exceeds Rs. 2 Lakh.
Query 2]
I am getting pension every month from the bank. Apart from pension I am also getting remuneration as consultancy charges for financial literacy from the bank which I am adding with my total income and accordingly income tax is paid at applicable rate. For example, Income from pension and interest say Rs. 6.00 lacs, added income from consultancy say Rs. 2 Lakh wherein TDS done U/s 194J as professional fee, Taxable income Rs.8.00 Lakh. My query: I am told that 50% amount is only taxable on income under section 194J? Please give your valuable opinion on the above point. [hk********@gmail.com]
Opinion:
- To simplify the taxation scheme, to reduce the compliance burden & to facilitate the ease of doing business for the small taxpayers, a concept of presumptive taxation is extended to professionals also by introducing section 44ADA in the Income Tax Act-1961. As a result, any resident Indian having income from profession (legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, authorized representative, film artist, company secretary, information technology and such other profession as notified by CBDT) with gross receipt from such profession not exceeding Rs. 50 lakhs have an option to declare 50% or more of the gross receipts as income from such profession. If minimum 50% of the receipts is offered as income then no books of accounts is required to be maintained. However, if such person claims income to be lower than 50% of the gross receipts from such profession & further if total income exceeds the maximum amount not chargeable to income-tax, then the person has to maintain the required/specified books of account, documents and get them audited from the CA.
- In your case, you have rendered consultancy services for financial literacy to the bank against Rs. 2 Lakh is received as fee. Question is, whether it is covered by presumptive taxation u/s 44ADA? If yes, you can offer 50% minimum as income u/s 44ADA & if not, then deduction would be admissible on actual basis & not on ad-hoc basis.
- Every time a new section is inserted it gives rise to new thoughts, interpretations, queries and anomalies and the same is the case with newly introduced section 44ADA. For the purpose of section 44ADA, profession is intended to cover only legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, authorized representative, film artist, company secretary, information technology & such other profession as may notified by CBDT. Professional services by way of consultancy of financial literacy doesn’t appear to be falling within the four corners of section 44ADA & in my personal opinion, you cannot opt for presumptive taxation by offering income @ 50% on presumptive basis. You can get the actual expenses incurred for earning the income as deduction.
[The author is a practicing Chartered Accountant from Nagpur. Readers may send their direct tax related queries at
SSRPN & Co
10, Laxmi Vyankatesh Apartment
C.A. Road, Telephone Exch. Square
Nagpur-440008
or email it at nareshjakhotia@ssrpn.com]
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