Buying insurance to require PAN soon

NEW DELHI: The next time you buy an insurance policy or open a post office savings account, your may have to quote your PAN number compulsorily. Taking forward its budget announcement, the government has kicked off inter-ministerial consultations in this regard.

In line with finance minister P Chidambaram���s budget 2008-09 announcement, the finance ministry has sought views of the concerned departments ��� banking, insurance and postal ��� on making permanent account number (PAN) mandatory for these instruments. At present, large number instruments such as bank account, insurance products, financial instruments sold by postal department like National Savings Certificate, Indira Vikas Patra do not require quoting of PAN.

Transactions like sale and purchase of immovable property or motor vehicle or payments in cash, of amounts exceeding Rs 25,000 to hotels and restaurants or in connection with travel to any foreign country require quoting of PAN ��� a 10-digit alphanumeric taxpayer identification number.

It is also mandatory to mention PAN for obtaining a telephone or mobile phone connection. Likewise, PAN has to be mentioned for making a time deposit exceeding Rs 50,000 with a bank or post office or depositing cash of Rs 50,000 or more in a bank. Quoting of PAN was made mandatory for demat accounts two years ago. It was made mandatory for mutual funds after the Budget 2007-08.

As indicated by the finance minister, suitable threshold limits would be provided for quoting of PAN especially for postal savings instruments because of their popularity in rural areas. Tax authorities have been pushing for expanding the scope of instruments where quoting of PAN is mandatory for sometime, as it allows them to establish an audit trail.

Data declared by the taxpayer in his or her income tax return can be tallied with the information about investments made from various organisations using the PAN.