Banks want the revenue authorities to do their depositors, who are economically weak, aged and infirm, a good turn.
They have moved the authorities to allow them to act upon self-declarations made in Form 15G and Form 15H (for non-deduction of tax at source) by the above mentioned category of people even if they do not have a permanent account number (PAN).
Banks, under the aegis of the Indian Banks’ Association, have impressed upon the Finance Ministry (the department of revenue functions under the ministry) that such a move will alleviate the hardship caused to the economically weaker sections, the aged and the infirm.
Further, this would also reduce the administrative burden to the authorities granting income-tax refunds.
Currently, in the absence of PAN, declarations for non-deduction of tax at source in Form 15G or in Form 15H cannot be acted upon and interest earned by the economically weaker sections, the aged and the infirm becomes subject to tax deduction at the higher rate of 20 per cent.
If a depositor furnishes PAN, then banks deduct tax at source at 10 per cent on the interest earned on fixed deposits, if it (the interest earned) is above Rs 10,000 a year.
PAN has been made compulsory for every transaction with the income-tax department.
The number is also mandatory for a number of other financial transactions, including opening of bank accounts, availing institutional financial credits, purchase of high-end consumer item, foreign travel, transaction of immovable properties, and dealing in securities.
A PAN card is a valuable means of photo identification accepted by all government and non-government institutions in the country.
Form 15G is a self-declaration form submitted by individuals below 60 years to banks stating that their income is below the taxable limit. Form 15H is submitted by those above 60.
Meanwhile, banks have sought a hike in the tax deducted at source limit on interest earned on fixed deposits from Rs 10,000 to Rs 50,000 a year.
This hike in the tax deducted at source limit on interest earned on fixed deposits would be in line with rationalisation of tax slabs in the draft Direct Taxes Code and take into account the impact of inflation on returns.
Such a move would reduce considerable paperwork and manpower, both at banks and at the income-tax department.