PAN disclosure hampers auto sales, banking deals

In fact, due to a decline in banking transactions, the Reserve Bank of India (RBI) is planning to meet finance ministry officials on the PAN problem. Moreover, the ministry has relaxed the PAN guidelines for thepurchase of two-wheelers as well as cheque transactions. "The entire plan of the government was far-fetched. Instead of giving PAN number first and then making PAN mandatory… they have made it vice versa," says a CII official. More than one crore PAN applications are pending with the department which will take at least six months to clear, he adds.

Bankers say that customers are now opting for fixed deposits of 49,000 or two FDs of Rs 25,000 instead of breaching the Rs 50,000 restriction. To add to overburdened banks, the paperwork from banks to income tax department has increased manifold as details on every big transactions are now sent in every 30 days.

In order to avoid big transactions, investors are conducting stock traders in batches which in the last few months led to monetary loss for the investors due to fluctuating Sensex. The government’s fiat came at a time when the economy is in the midst of a crippling recession with no lights at the end of the tunnel. "Mumbai is already reeling under anextortion threat. As soon as a customer buys an automobile… the underworld gets information of the sale. The PAN fiat has further vitiated the atmosphere," adds a Sai Service official.The property transactions in the metropolis has come down to a trickle. The real estate industry in Mumbai, which fell by almost 50 per cent since its 1995 artificial boom, is witnessing less transactions as the government has made PAN compulsory at the time of registration.

As most of the applications for PAN has been made this year, auto dealers suggest that the sale of auto should be allowed to take place on the basis of a photo copy of PAN application alone. "Alternatively, the government can ask for the PAN after the sale took place," adds a Maruti dealer.

Many customers are even giving out wrong PAN and GIR numbers in order to circumvent the IT order. "I hope by the time IT department gets us, we will get out real PAN," says a Telco customer.

However, as usual, customers have come out with loopholes in thegovernment’s guidelines. "More customers are now going for second hand cars which are two or three months old as the used car sales does not require any PAN," says a Telco dealer.