PAN Mandatory for Cash Deposits of Rs2000 Notes Exceeding Rs50,000

The Reserve Bank of India (RBI) has recently withdrawn the Rs2000 notes from circulation, and individuals who possess these notes now have two options. They can either deposit them into their bank accounts or exchange them at a bank for notes of different denominations. However, in accordance with income tax regulations, it is mandatory to quote the Permanent Account Number (PAN) if the cash deposit exceeds Rs50,000 in a single transaction.
According to Rule 114B of the income tax regulations, if someone deposits more than Rs50,000 in cash in a single day, whether at a bank or post office, they must provide their PAN. However, if the deposited amount does not exceed Rs50,000 in a single day, quoting PAN is not mandatory.
The Rule 114B does not apply to the total amount of cash deposits made throughout the financial year; rather, it only applies to cash deposits made on a single day. The bank or post office should not request for their PAN or Aadhaar, for example, if someone deposits Rs20,000 in cash on one day and then deposits an additional Rs35,000 in cash a few days later.
To illustrate, let's consider an example. If you deposit Rs30,000 in Rs2000 banknotes in your bank account, and then Rs40,000 in Rs2000 banknotes in the same account 15 days later, the bank will not ask you to provide your PAN when you deposit the Rs2000 notes in cash. However, the bank would require you to mention your PAN if you made a single cash deposit totalling Rs70,000 in a single day.
Additionally, if cash deposits or withdrawals total more than Rs20 lakh in a fiscal year, the government has mandated the use of PAN or Aadhaar. The Central Board of Direct Taxes (CBDT) released this notification on May 10, 2022, and the new regulations went into effect on May 26 of that same year.
While individuals have the option to exchange Rs2000 notes, there is a limit imposed by the RBI. A maximum of 10 notes, or Rs 20,000, can be exchanged by one person at once, according to the RBI notification. The RBI governor stated in a media interaction on May 22, 2023, that banks will follow their own processes and rules for the exchange of Rs2000 notes.
The amount that can be deposited into a bank account, however, is not restricted. For deposits, Know Your Customer (KYC) guidelines will be in effect.
The deadline for depositing or exchanging Rs2000 notes is September 30, 2023. The decision to withdraw Rs2000 notes from circulation aligns with the RBI's clean money policy, while emphasizing that the Rs2000 note continues to be a legal tender.



To continue

Sign Up or Sign In


We are listening!

Solve the equation and enter in the Captcha field.

Changes in Our Business Model
25th Sept 2020
Greetings from Moneylife Advisory Services
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
What remains the same:
  • Recommendations on insurance, investment and Lion stocks, will continue as a part of the MAS premium subscription. Our strength has always been research and this will remain available to you through our recommendations.
  • The magazine and all textual content will remain as part of the service
  • We will have to suspend the restructuring tool.
What changes:
  • The interactions in Ask / Handholding will offer investment advice but not specific to your situation. It will offer information on investment products and also clarify your doubts about various financial products. It will be a forum for information, not for advice. This will be implemented with immediate effect and our guidelines in Ask, reflect this now.
Over the next few weeks our site and our communication to you will reflect these and other additional changes.
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
Debashis Basu