PAN Card Mandatory for Buying Insurance?
THE finance ministry has decided to make a permanent account number (PAN) card mandatory for buying all insurance policies that have an element of investment in the capital market and the premium exceeds Rs 1 lakh per year.
The ministry along with the insurance regulator, Insurance Regulatory and Development Authority (Irda), is working to make the use of PAN mandatory for buying such insurance policies. Insurance products with investment element means all unit-linked insurance policies (Ulips) would come under the new provision.
“Making use of PAN card compulsory will really help. This way, the government can keep track of all financial transactions. It will be useful even for security purposes. These days by tracking financial transactions one can solve many cases,” said Tarun Bajaj, joint secretary, insurance, ministry of finance.
Irda has already started working on the initiative and say they will notify it soon to ensure compliance. Insurance companies say making a PAN card mandatory will affect their business only initially. A senior official of Bharti AXA Life Insurance, who did not wished to be named, said, “The PAN is now an integral component of any financial transaction - from opening a savings bank account to purchasing a house or applying for a credit card. Thus, the urban Indian consumer is now fairly accustomed to the use of PAN cards in buying financial solutions. For these customers buying Ulips, mandatory declaration of the PAN may be a new development that they would need to be accustomed to.
It may take some time for PAN declaration at the time of buying an Ulip to become a practice.” Last year, former finance minister P Chidambaram had announced in the budget that that the PAN would be made mandatory for all financial transactions. However, now the finance ministry has put a floor of Rs 1 lakh of premium per year.
Last year in his budget speech, Chidambaram had proposed “to extend the requirement of PAN to all transactions in the financial market subject to suitable threshold exemption limits.” However, the action taken report presented in the Parliament on Monday says, “It is proposed to mandate PAN for such insurance products that have an investment element in them, with exemption granted in cases where the contracted premium payable on such insurance policy does not exceed Rs 1 lakh.”
Initially, there was talk of the PAN becoming mandatory for insurance policies, post office savings accounts or its savings certificates which did not require record of the 10digit alphanumeric taxpayer identification number.
duave Said,
June 9, 2009 @ 5:42 pm
They should have done this a long time a go. Saves more time and money.