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Transactions for which furnishing PAN is mandatory
The Permanent Account Number (PAN) is a unique 10-digit alphanumeric identification number issued by the Income Tax Department. It is issued in the form of a laminated plastic card, commonly known as a PAN card. The PAN card serves both as a personal identification card and proof of age. The card includes the following information:
u Name of the cardholder – Individual/ Company
u Name of the father of the cardholder – Applicable for individual cardholders.
u Date of birth – Cardholder's date of birth or the date of registration for a company or firm.
u PAN Number – It is a 10-letter alpha-numeric number that provides distinct information about the cardholder.
Example of PAN Number: AAAPA1234A
² The first three characters in the PAN card represent the alphabetic series running from AAA to ZZZ.
² The fourth character of PAN represents the status of the PAN holder.
"P" stands for Individual
"C" stands for Company
"H" stands for Hindu Undivided Family (HUF)
"A" stands for Association of Persons (AOP)
"B" stands for Body of Individuals (BOI)
"G" stands for Government Agency
"J" stands for Artificial Juridical Person
"L" stands for Local Authority
"F" stands for Firm/ Limited Liability Partnership
"T" stands for Trust
² The fifth character represents the PAN holder's last name or surname in the case of an individual. For non-individuals, the fifth character represents the first letter of the entity's name.
² The next four characters are sequential numbers ranging from 0001 to 9999.
² The final, tenth character is an alphabetic check digit.
How to obtain a PAN Card?
The Income Tax Department has authorized UTI Infrastructure Technology and Services Limited (UTIITSL) and National Securities Depository Limited (NSDL) [now known as Protean] to establish and manage PAN Service Centers. These centers have been set up in various major cities in India, and they are referred to as UTIITSL/Protean PAN application centers. Individuals who wish to obtain a PAN can submit the PAN application form (Form 49A/49AA) along with the necessary documents and fees at these centers or can apply online through the UTIITSL or Protean website.
Utility of PAN
PAN allows the department to track and link all of the PAN holder's transactions with the department such as tax payments, TDS/TCS credits, income returns, specified transactions, correspondence etc. It also allows for the easy retrieval of PAN holder information as well as enables the department to match and review the investments, borrowings, and other business activities of the PAN holder.
Section 139A of the Income Tax Act,1961 lists the individuals and entities that are required to obtain a PAN card. This includes-
Ø Every person whose total income or the total income of any other person for whom he is assessable during the year exceeds the maximum amount not chargeable to tax.
Ø A charitable trust that is required to file a return under section 139(4A).
Ø Every person carrying on any business or profession whose total sale, turnover, or gross receipts exceed or are likely to exceed five lakh rupees in any year.
Ø Every non-individual resident person and person associated with them must obtain a PAN if their financial transactions during the fiscal year exceed Rs. 2,50,000.
Ø Every person intending to enter into specified financial transactions that requires the quoting of PAN.
Transactions in which quoting of PAN is mandatory
According to Rule 114B of the Income Tax Rules, it is mandatory for all individuals and entities, with the exception of the Central Government, State Governments, and Consular Offices, to quote their PAN (Permanent Account Number) in the following transactions:
1) The purchase or sale of a motor vehicle other than a two-wheeled vehicle.
2) Opening an account with a banking company or a co-operative bank [other than a time deposit referred to in point No. 12 and a Basic Savings Bank Deposit Account].
3) Submitting an application for a credit or debit card.
4) Opening a demat account with a depository, participant, custodian of securities, or any other entity regulated by the Securities and Exchange Board of India (SEBI).
5) Payment of more than Rs. 50,000 in cash to a hotel or restaurant against a bill at any one time.
6) Payment in cash in excess of Rs. 50,000 for travel to any foreign country or for the purchase of any foreign currency at any one time.
7) Payment exceeding Rs. 50,000 for the purchase of mutual fund units.
8) Payment of exceeding Rs. 50,000 to a company or institution for the acquisition of debentures or bonds issued by it.
9) Payment exceeding Rs. 50,000 to the Reserve Bank of India for the purchase of bonds issued by it.
10) Cash deposits of more than Rs. 50,000 in a single day with a banking company or a cooperative bank.
10A) Cash deposits totaling more than Rs. 2,50,000 made with a banking company, cooperative bank, or post office between November 9th and December 30th, 2016.
11) Cash payment in excess of Rs. 50,000 in any one day for the purchase of bank drafts, pay orders, or banker's cheques from a banking company or a co-operative bank.
12) A time deposit of more than Rs. 50,000 or more than Rs. 5 lakh made during a fiscal year with - (i) a banking company or a co-operative bank; or (ii) a Post Office; or (iii) a Nidhi as defined in Section 406 of the Companies Act of 2013, or (iv) a non-banking financial company.
13) Payment in cash or by bank draft, pay order, or banker's cheque of more than Rs. 50,000 in a fiscal year for one or more pre-paid payment instruments, as defined in the Reserve Bank of India's policy guidelines for the issuance and operation of pre-paid payment instruments issued under section 18 of the Payment and Settlement Systems Act, 2007, to a banking company, a co-operative bank, or any other company or institution.
14) Payment of a sum totaling more than Rs. 50,000 to an insurer as a life insurance premium in a financial year.
15) A contract for the sale or purchase of securities (other than shares) for an amount greater than Rs. 1 lakh per transaction.
16) Sale or purchase of shares in a company that is not listed on a recognised stock exchange for more than Rs. 1 lakh per transaction.
17) The sale or purchase of any immovable property for an amount exceeding ten lakh rupees or valued by stamp valuation authority referred to in section 50C of the Act at an amount exceeding ten lakh rupees.
18) The sale or purchase of goods or services of any kind other than those listed above for an amount exceeding Rs. 2 lakh per transaction.
1. A minor can use the PAN of his father, mother, or guardian as long as he does not have any taxable income.
2. Anyone who does not have a PAN, may enter into any of the above transactions by filing a declaration in Form No.60.
3. A non-resident is not required to quote the PAN in a transaction referred to in points 3 or 5 or 6 or 9 or 11 or 13 or 18.
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