' PAN CARD ' Rules creates sensational in India.
Permanent Account Number (PAN) is a unique 10-digit alphanumeric identity allotted to every taxpayer by the income tax (I-T) department. Quoting the PAN is mandatory when filing income tax returns, deduction of tax at source, communicating with the I-T department, etc. It is steadily becoming an indispensable document for sale or purchase of motor vehicles other than two-wheelers, sale or purchase of immovable property for an amount exceeding Rs 10 lakh and sale or purchase of goods/ services of an amount exceeding Rs 2 lakh.
The need of PAN also arises while opening a bank account (other than basic savings bank account), issue of a credit or debit card, opening a demat account; depositing cash in bank or purchasing bank drafts for amounts exceeding Rs 50,000 in a day; paying life insurance premium over Rs 50,000 in a financial year. In fact, PAN is also required to be quoted while making a time deposit. Settling a restaurant/hotel bill over Rs 50,000 also necessitates quoting of PAN. It is required for purchasing foreign currency, units of mutual funds or bonds/debentures of a company, RBI bonds, sale or purchase of unlisted shares for an amount over Rs 1 lakh.
Obtaining PAN is voluntary. However, application for allotment of PAN is required to be compulsorily made where total income of a person exceeds the maximum amount not chargeable to tax (Rs 2.5 lakh for an individual below 60 years) during any financial year or when the turnover of an entity carrying out business or profession is over Rs 5 lakh in a financial year. Furthermore, PAN is also required by a person who receives an amount on which tax is required to be deducted at source.
Vide Finance Act, 2018, Section 139A of the Income-tax Act, 1961 has been amended to provide that obtaining a PAN card shall also be mandatory for every person being a resident, other than an individual, who enters into a financial transaction for over Rs 2.5 lakh and for the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer or any person competent to act on behalf of such person.Therefore, obtaining PAN is mandatory even if the total sales/ turnover/ gross receipts of a resident entity are not or are not likely to exceed Rs 5 lakh in a financial year. Besides, even the principal officers of such entity are required to obtain PAN compulsorily. This inclusion has been made with the intention to bring more people in the tax net, improve tax collection and track financial activity of entities as well as those responsible for running them.
Timeline for PAN
The Income Tax Rules, corresponding to Section 139A, did not provide the time line by which such persons may apply for PAN allotment. Accordingly, CBDT, announced necessary changes to the Rules and the PAN Application Form 49/49A. The revised rules which shall come into force from December 5, 2018, now require such a resident person to apply for allotment of PAN on or before May 31 of the assessment year for which such income is assessable.
Further, in the revised application form the mandatory field seeking the father's name of the applicant has been wiped out. The I-T department will now allow applicants who were raised by single mothers to furnish their mothers' names in the application. The applicant has been given an option to select name of either father or mother, which the applicant may like to be printed on PAN card. The change has been made keeping in view, the interests of those taxpayers who do not wish for their estranged/departed father's name to appear on their PAN cards.
PAN valid in electronic form
I-T Act earlier provided that the PAN shall be issued in the form of a laminated card. Finance Act, 2018 provided that PAN under the new series means a PAN having ten alphanumeric characters. Thus, the importance of having laminated cards has been done away with. Hence, having the number, as issued by the department shall be sufficient for all intents and purposes.
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