How PAN and Income Tax department are interlinked
Tax evasion is an illegal practice, where an organization or individual person avoids paying their true tax liabilities. It’s a criminal practice and people who do this need to know this that all your transactions are under Income Tax department surveillance. Now you must be thinking that how IT department track all your transactions. How they check and solve the raised issue of Tax evasion, what are the steps taken by Income Tax department to vigilance against undeclared income? Well, all this happens with the help of PAN card. Now come let’s see, how PAN and income tax department are interlinked.
Nowadays reporting or submission of PAN Card is compulsory for all your high-value transactions. Property registrars and financial institutions with which you deal with like your bank, insurer, Mutual Fund Company and Credit Card Company feed the tax department with information regarding your big transactions. All your big transaction details are passed by banks, mutual fund companies, financial institutes, Credit Card Company and insurance company etc in regards to the transaction. They are the major feeding source to income tax department as they all have your PAN card details. And, this is how PAN and income tax department are interlinked. So let’s find out what are the ways through which income tax department monitor all your big transactions.
How financial transactions tracked by Income tax department:-
- We all do high value or major transactions through our banking accounts. Whether you do any small or high-value transaction, the bank keeps its eye on your transaction flow. Income tax department gets to know about all your account activities through banks. Bank process all your account detail ( FD’s, cash deposit or demand draft) aggregating above 10 lakh or more in a particular FY under different accounts to income tax department.
- The property registrar is liable to report purchase or sale of immovable property exceeding Rs. 30 lakh.
- People think they can save tax by investing in shares, mutual funds and debentures. But if you are investing in the purchase of more than 10 lakh of shares, debentures and mutual funds you’re legible to pay tax. And the beauty is you can’t hide this because companies give a report of all such accounts to IT authorities. They give all your name, address, and PAN etc details to them to take required action for avoiding Tax evasion.
- Those who earn more than Rs. 50 lakh a year, they have to a report their assets and liabilities in a new ITR form this year.
- If you’re making a cash payment of 10 lakh or more through any other mode or Rs. 1 lakh towards your credit card during the financial year. Then, your credit card company will report the transactions to the income tax authorities. They will give your transaction as well as PAN, address, name and other required detail and this is how PAN and Income Tax department are interlinked
- Banks deduct TDS if interest income on fixed deposits is more than Rs. 10,000 in a year. And Tax Deducted at Source is another way of tracking income of the taxpayer
So all these are the reasons telling how you cannot hide your income from income tax department. Also, you must have also learned that how PAN and income tax department are interlinked. What are other places where the record of PAN card is mandatory?
- While making payment of Rs. 50,000 or more for insurance premium
- The opening of the bank or demat account
- Applying for a credit card Purchase of insurance, share, mutual funds, bonds, debentures worth more than Rs. 50,000
- Other than 2 wheeler sale and purchase of vehicles
- Deposition or opening of FD of more than Rs. 50,000 in bank