Monday, 11 June 2012

Beware of quoting PAN for Railway Tatkal Bookings

Advice your tax payers not to quote PAN for railway tatkal bookings
Indian Railways(IR) Displaying confidential Tax Payers information

*PAN as identity proof for Tatkal bookings*
IR has started collecting PAN and other specified identity information insupport of tatkal bookings as per recent direction and displaying PAN alongwith name, sex and age of reserved passengers on the reservation
charts pasted on to the railway compartments.

*A boon for benami transactions*
Finance Act 2012 has made it mandatory for certain traders like jewellerydealers to collect tax (TCS) from customers on purchase of jewellery worth Rs.2 lakhs and above. While complying with TCS rules for collection,
payment and uploading of TCS information (Efiling of TDS returns) jewellery dealers have to furnish PAN of customers. For Certain customers it is not convenient to provide PAN as they may have constraints in explaining source (black money earned through corruption, undeclared incomes etc.,) and in such cases to accommodate high networth customers, the traders have a easy source of benami PAN particulars like name, sex and age from reserved  railway compartments. Agents are paid Rs.10/- per for  copying PAN particulars alongwith name, age and sex pasted on to the reserved compartments . These persons are copying selected PAN information of senior citizens, women etc., only from sleeper class with the intention that passengers in sleeper class are not serious tax payers and generally salaried class.

*Impact on traders:*
Traders providing wrong particulars of PAN are penalised with Rs.10000 for violation of furnishing wrong particulars. Traders can always say that the have accepted the PAN particulars on the face value as there is no
condition for the traders to collect xerox copy of PAN card at the time of sale of jewellery. In how may cases till now income tax department has penalised traders submitting wrong particulars of PAN. Afterall Income Tax
department wants taxes. This is known to the department only in case of long drawn dispute by the PAN holder. Generally these disputes are settled after 2 years.

*Impact on PAN holders who is a tax payer:*
This is known only to the regular tax payers, who regularly check their tax credit on form 26 AS provided by the Income Tax department on their website. This form 26 AS is updated only on filing of etds returns by
traders. There is almost 6 - 12 months time for the PAN holder to known that a transaction of above nature has taken place on his name and only if he goes through form 26 AS. On noticing the tax credit of above nature
while reconciling form 26 AS for tax credits for filing the return during subsequent financial year i.e July/September, the tax payer has an option to exclude the same and go ahead in filing the return. In that case the  department will first initiate action from the tax payer side asking him to prove that he has not carried on the above transaction. The onus lies on the genuine tax payer for the fault committed by the traders. All this
dispute settlement takes a time more than 2 years. The department may also ask the genuine tax payer to explain the sources of above transaction. 

*Impact on PAN holders who is a not tax payer:*
This is not known to the non tax payer/filler at all and he comes know only when the tax department issues a notice to explain the source of above transaction. This is a long drawn process by which only genuine public are
scapegoat again and again and intelligent business man and corrupt people are free from all hassles.

The IR should stop publishing confidential tax particulars on the reservation charts that are displayed on the railway compartments. Further Tax department should put a rule that while quote the PAN the traders/dealers have to mandatory collect self attested pan xerox copy to avoid unnecessary litigation to the genuine public.
Public should quote their PAN only while dealing in mandatory financial transactions and avoid quoting the same for identity proof.
This is communicated to all in the larger interest of public, railways, and tax department.
Thanks to Premnath D.S, Chartered Accountant for the above info.