The proposed amendments on the use PAN for various transactions are slated to come into effect from August 1, 1998. The finance minister had proposed to make it obligatory for assessees to quote their PAN or GIR number for certain high-value transactions, which include purchase and sale of immovable property, purchase and sale of motor vehicles, transactions in shares exceeding Rs 50,000, opening of new bank accounts, fixed deposits of more than Rs 50,000, applications for allotment of telephone connection and payment of hotels exceeding Rs 25,000.

Banks will face a major hurdle should the intent translate into a piece of legislation. Quoting of PAN or GIR numbers or even giving a declaration on a form to be prescribed by the Central Board of Direct Taxes(CBDT) will scare away people from parking surplus money with the banks.

It has been argued that whatever be the intention of the finance ministry, such a move will dissuade non-tax payers and those who are not filing returns from keeping their money in banks.

The move will have larger macro-economic fallout with the efforts to encourage savings getting a beating. On the other hand the revenue department has yet to gear itself to issue PAN cards to a host of taxpayers who have applied for the card long back and have not yet received them.

Banks will also be at the receiving end with the government making it mandatory to quote PAN or GIR numbers for fixed deposits beyond Rs 50,000. Earlier, the government has made interest income of over Rs 10,000 in a year taxable. That prompted the depositors to split their fixed deposits to ensure the interest income in one bank branch does not exceed Rs 10,000 in a year.

Now with the new provision of quoting PAN or GIR numbers for fixed deposits exceeding Rs 50,000the depositors will further split their accounts increasing the work load of banks without any commensurate gains to the exchequer. In this regard the pressure is building on the finance ministry to have reasonable limits so as not to discourage common people from going to banks.

Similarly, it has been pleaded that steps for quoting PAN or GIR numbers on purchase and sale of immovable property, motor vehicles and applications for allotment of telephone numbers be put on hold for some time till revenue department is able to issue PAN numbers to those who have started filing returns.

The builder lobby has also urged that the government should at least sort out the issue of streamlining the stamp duty before making quoting of PAN mandatory on property transactions. The move, if comes into effect, will further dampen the property market which going through tough times.