Purchases over 1 lakh to need PAN, Aadhaar?

NEW DELHI: The Supreme Court-backed special investigation team (SIT) on black money has recommended a series of measures, including quoting of permanent account number for all purchases beyond Rs 1 lakh in addition to submitting an identity proof such as Aadhaar.

The rule, the SIT has suggested, should cover purchases made by cash as well as cheque. It has further recommended that a central "Know Your Customer" (KYC) database be set up which captures details of PAN, passport number or driving licence number, which are often quoted for transactions.

While several suggestions have been made by various experts panel in the past too, the government has been slow in implementing them and cracking down on the use of cash, which the SIT has pointed out also results in terror threats.

It has also recommended that the amount of cash in possession should be capped at Rs 10 or 15 lakh and any amount beyond the threshold be confiscated. The SIT has talked about checks on transportation of illegal wealth.

Citing European rules, barring cash transactions beyond a limit, the SIT has said that a similar system should be followed in India as well but the limit should be fixed as the common man's daily transactions are not impacted.

As a strong deterrent, the panel has recommended that tax crimes be made predicate offence with a high tax evasion threshold such as Rs 50 lakh so that it does not cause hardship to small tax payers. The move pushed by the Finance Action Task Force, the global group against money laundering, the underlying crimes that give rise to money laundering. SIT has suggested that this should be brought under Prevention of Money Laundering Act.

The SIT has also underlined the need to tally the Indian export and import data with those of other countries — on a quarterly, if not monthly, basis — as a tool against over-invoicing and under-invoicing. This it said has been suggested by FATF, which has India as a member.

While pointing out that over- and under-invoicing of export and import is a known source of stashing black money overseas, the Supreme Court-backed panel has also said that bills of export or shipping bills should include a new column on the international price of the goods or the machinery to be shipped out as a possible deterrent.

Further, it has suggested that cross-border wire transfer of funds should be monitored carefully besides making provision of confiscation of property abroad more stringent under FEMA.



While the other moves are meant to track unaccounted cash better, the SIT has also recommended setting up of five additional chief judicial magistrate courts in Mumbai for prosecution of 5,000 pending income tax cases.