“Unlocking the Secrets: How Demonetization of Currency Boosts PAN Usage & Empowers You!”

Introduction

Demonetization was implemented in India in 2016 with the aim of modernizing the cash-dependent economy and combating corruption. The demonetization policy involved the withdrawal of ₹500 and ₹1,000 banknotes, which constituted 86% of India’s cash circulation.

PAN Card and Demonetization

After the demonetization of currency, the Indian Income Tax Department made it mandatory to provide a PAN (Permanent Account Number) for cash deposits amounting to ₹2.5 lakh or more. This requirement was introduced to prevent the conversion of black money into white money through cash deposits. Individuals wishing to deposit ₹50,000 or more in a single day in a scheduled or cooperative bank also need to provide their PAN.

The government provided a 50-day window for individuals to submit the demonetized notes into their bank accounts. Additionally, PAN is required for various transactions including purchasing bank drafts, paying orders, buying banker’s cheques, opening accounts, and making fixed deposits.

Why was Demonetization of Currency Introduced?

Demonetization was introduced to combat the circulation of counterfeit currency notes, which were used for anti-national and illegal activities. Fake currency notes resembled genuine notes and lacked security features. They were also instrumental in hoarding black money within the country. Since cash transactions are prevalent in India, the circulation of fake currency notes posed a significant threat. Demonetization aimed to address this issue.

Withdrawal for the Wedding of Ward

To ensure that individuals could celebrate their ward’s ceremony or wedding, the government allowed the withdrawal of ₹2.50,000 until 30 December 2016. The following conditions were applied:

• Withdrawals were only permitted from complete accounts that were KYC compliant.
• If the wedding date was on or before 30 December 2016, the individual could withdraw the entire amount.
• Either parent could withdraw the money for their ward’s wedding, but only one parent was eligible to do so.

Banks were required to keep a record of evidence related to the wedding (advance payment receipts, invitation cards, etc.) for verification purposes. Families were also encouraged to use non-cash transaction modes for wedding payments.

Steps Taken for the Farmers

Farmers were allowed to withdraw ₹25,000 weekly from their deposit accounts for various agricultural expenses. This amount could be used to buy seeds from government outlets and agricultural universities. NABARD provided cash credit limits to ensure smooth farming operations. Banks were instructed to supply adequate cash to District Central Cooperative Banks (DCCBs) and Regional Rural Banks (RRBs) to facilitate procurement at Agricultural Produce Market Committees (APMCs).

Utilizing Electronic Mode

To promote cashless transactions, individuals were encouraged to use electronic modes such as mobile banking, NEFT, internet banking, RTGS, and IMPS. The limit for prepaid payment instruments (PPI) was increased, and merchants were allowed to transfer funds from PPI to their accounts. Various measures were put in place to facilitate electronic transactions, including increasing the semi-closed prepaid payment instrument limit and reload value.

Emergency Cash Needs

Despite the demonetization, specific banknotes of ₹500 could be used for emergency purposes until 15 December 2016. These purposes included payments at pharmacies, government hospitals, bus and railway ticket counters, milk booths, gas stations, and more. Additionally, cash could be used for burials, LPG cylinder purchases, and various fee payments.

Withdrawing Cash Against Cheque

Individuals were permitted to withdraw cash against a cheque with a weekly limit of ₹24,000. This withdrawal could be made through ATMs or over-the-counter transactions. Business entities with active current accounts for at least three months could withdraw ₹50,000 weekly after demonetization.

PAN Card and Demonetization Impact

Following the announcement of demonetization, there was a significant increase in the number of PAN applications. Within a year, the number of PAN applications jumped by approximately 300%. This increase indicated a growing awareness and willingness among individuals to keep their business transactions transparent.

Frequently Asked Questions (FAQs)

Conclusion

Demonetization had a significant impact on the use of PAN cards in India. The policy aimed to combat the circulation of counterfeit currency and promote transparency in financial transactions. By making PAN mandatory for certain cash deposits and transactions, the government took steps towards curbing black money and promoting a cashless economy. The increase in PAN applications following demonetization indicated a shift towards more transparent business practices.

For any further queries related to PAN and demonetization, please refer to the FAQs section or seek assistance from authorized government bodies.

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