Small business owners are facing lot of dilemma. As, in most cases earlier before demonetization maximum transactions were done in cash. After demonetization situation has changed. Since government wants a less cash economy small business owners are moving towards digital transactions.
As per government rules, without PAN card any amount beyond Rs. 49,995/- has to be deposited mandatory with a PAN Card only. Banks don’t accept Rs. 50,000 deposit by cash or cheque without the PAN info on the deposit form. You can deposit up to Rs 50K in a bank account without furnishing any PAN details.
With PAN Card: There is no amount restriction for cheque deposit into an account with PAN card but any amount beyond Rs. 10,00,000/- has to be reported to Income tax dept. There might be charges for deposit which might differ from bank to bank.
In Case of cash deposits the charges are very different from bank to bank.
PAN card is compulsory for many transactions. E.g.: If the transaction is related to immovable property and if the amount exceeds Rs 10 Lac or the stamp valuation department values the property to be more than Rs 10 Lac, then the PAN is mandatory. Opening all the banks account except a basic savings account, requesting for a bank draft or pay order exceeding Rs 50K also require you to furnish your PAN details.
Furnishing the wrong PAN details is considered a legal offence and the offender could be jailed for such an act. Government wants to track black money holders hence identification and following proper Know your customer norms has become compulsory.
But if some business has transactions outside India will these Rules of deposit attract them?
Well, there is no specified limit to the amount of cash you can deposit in Non-Resident Ordinary Rupee Account. However, following should be kept in mind, as enunciated in the RBI’s Master Circular on Non-Resident Ordinary Rupee Account
a) The Non-Resident Ordinary Rupee Account can only be used to put through bona fide transactions denominated in Indian rupees, which are compliant with Foreign Exchange Management Act rules and regulations.
b) Among'st the permissible credits, you can deposit freely convertible foreign currency tendered by account holder on a visit to India. However, amount exceeding USD 5000 need to be supported by currency declaration,
c) If rupee funds are credited, it must be supported by encashment certificate if they represent funds brought from outside India.
One can also imagine if there are more than one bank accounts of business owners then how much can he /she deposit in it? All deposits need to have govt approved ID proof. (Aadhaar, PAN, DL, passport etc). If you provide the same ID proof for all accounts, Government will target you for taxes. Government has stated that they will not monitor deposits only up to Rs.2.5 lakhs.
This means you have trouble free deposit only up to Rs.10 lakhs. (Assuming all accounts had different ID proofs of you). One has to pay taxes for Rs.2.5 lakhs minimum.