Friday, August 12, 2011

[www.keralites.net] All About Permanent Account Number (PAN)

 

First of all let me clarify the question Is it compulsory to file Income Tax Return if I get a PAN card?�  
Kindly note that, filing of Income Tax Return is different from paying of taxes. Though PAN number these days are mandatory for lot of financial and investment related transactions, but it does not mean that you have to pay tax If you have a PAN or you need to file Income Tax Return for the  simple reason that, you have been allotted a Permanent Account Number (PAN) by the Income Tax Authorities.  Basically, you need to pay tax or file Income Tax Return only if you earn or accrue taxable income in India or to get a tax refund if any tax amount is deducted from your income, but your total income is below the income limit prescribed as per the relevant rules and regulations of Income Tax Act, 1961.
Permanent Account Number (PAN) refers to a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department in India. It is a must to have a PAN number for all those who file their income tax returns, now it is mandatory to quote the PAN on Income Tax Returns plus so many other finacial transactions.
Also, it is now compulsory to quote PAN in all documents pertaining to financial transactions notified from time to time by the Central Board of Direct Taxes, such as sale and purchase of immovable property or motor vehicle or payments in cash, of amounts exceeding a certain limit to hotels and restaurants, or in connection with travel to any foreign country.  Likewise, PAN has to be mentioned for making a time deposit exceeding Rs. 50,000/- with a Bank or Post Office or for depositing cash of Rs. 50,000/- or more in a Bank.
 
 A typical PAN look like ALTPM8952K.
 
·         First three characters i.e. ALT� in the above PAN are alphabetic series AAA to ZZZ
·         Fourth character of PAN i.e. P� in the above PAN represents the status holder. P� stands for Individual, F� stands for Firm, C� stands for HUF, A� stands for AOP, T� stands for TRUST etc.
·         Fifth character i.e. M� in the above PAN represents first character holder�s last name/surname.
·         Next four characters i.e. 7190� in the above PAN are sequential from 0001 to 9999.
·         Last character i.e. K� in the above PAN is an alphabetic check digit.
How to apply for a PAN ?
The Income Tax Department has ensured that applying for a PAN is a simple and convenient procedure. All you need to do is submit the requisite Application Form No. 49A  . The PAN application can also be downloaded from the website of UTI Investor Services Ltd (the authorised agency to manage IT PAN service Centres in various cities) or from the website of National Securities Depository Ltd (NSDL) or printed by local printers or photocopied (on A4 size 70 GSM paper) or obtained from any other source. The form is also available at IT PAN Service Centres and TIN Facilitation Centres.
You will need a recent colour photograph (stamp size: 3.5 cm x 2.5 cm) to attach on the form. You must mention the designation and code of the concerned Assessing Officer of the Income Tax department in Form 49A. You can get this from the IT PAN Service Centres.  Also, the application shall have to be accompanied by a proof of identity as well as a proof of residence.
1)    Individual and HUF (Hindu Undivided Family) Applicants who are citizens of India and located within India at the time of application for PAN:

a) Copy of any one of the following will serve as a proof of identity:
  • School leaving certificate
  • Matriculation certificate
  • Degree of recognized educational institution
  • Depository account statement
  • Valid Credit card
  • Bank account statement
  • Water bill
  • Ration card
  • Property tax assessment order
  • Passport
  • Voter's identity card
  • Driving license
  • Certificate of identity signed by a Member of Parliament or Member of Legislative Assembly or Municipal Councilor or a Gazetted Officer.

Note:
  • Document being submitted should be in the full name of the applicant as mentioned in the PAN application.
  • In case the PAN applicant is a minor, any of above documents of any of the parents or guardian of such minor shall serve as proof of identity.
  • In case PAN application is made on behalf of a HUF, any of above documents in respect of karta of the HUF will serve as proof of identity.

b)  Citizen of India located outside India at the time of application for PAN - Copy of passport will serve as a proof of identity

c)  Foreign Citizen located in India at the time of application for PAN - Copy of passport and Copy of Person of Indian Origin (PIO) card issued by Government of India will serve as a proof of identity

d)  Foreign Citizen located outside India at the time of application for PAN - Copy of any one of the following will serve as a proof of identity:
  • Passport
  • Other National ID attested by Indian Embassy/Consulate/High Commission/Apostille
  • Person of Indian Origin (PIO) card issued by Government of India
2)    One of the followong documents should be submitted as proof of address for individual applicants and HUF applicants
 
a)     Individual and HUF Applicants who are citizens of India and located within India at the time of application for PAN - Copy of any one of the following will serve as a proof of address:
  • Electricity bill*
  • Telephone bill*
  • Depository account statement*
  • Credit card statement*
  • Bank account statement*
  • Rent receipt*
  • Employer certificate*
  • Ration card
  • Passport
  • Voter's identity card
  • Property tax assessment order
  • Driving license
  • Certificate of address signed by a Member of Parliament or Member of Legislative Assembly or Municipal Councilor or a Gazetted Officer.
Note:
  • *For serial numbers 1 to 7, proof of address should not be more than six months old from the date of application.
  • Document being submitted should be in the full name of the applicant as mentioned in the PAN change request application.
  • In case the PAN applicant is a minor, any of above documents of any of the parents or guardian of such minor shall serve as proof of address.
  • In case PAN change request application is made on behalf of a HUF, any of above documents in respect of Karta of the HUF will serve as proof of address.
  • It is mandatory for individuals and HUF to mention their address for communication on the PAN change request application and to submit valid proof of the same.
b)     Citizen of India located outside India at the time of application for PAN  - Copy of any one of the following will serve as a proof of address:
  • Passport
  • Bank account statement in country of residence
  • NRE bank account statement**
c)     Foreign Citizen located in India at the time of application for PAN .  Copy of any one of the following will serve as a proof of address:
  • Passport
  • Bank account statement in India
  • Residential permit issued by the State Police Authorities
  • Registration certificate issued by the Foreigner's Registration Officer
  • Person of Indian Origin (PIO) card issued by Government of India
  • NRE bank account statement**
  • Visa application to Indian authorities & Visa granted & appointment letter/contract from Indian Company & Certificate (in original) of address in India of applicant issued by authorized signatory of employer on employer�s letter head mentioning the PAN of the employer & copy of PAN card for the PAN mentioned in the employer�s certificate***
§   Foreign Citizen located outside India at the time of application for PAN.  Copy of any one of the following will serve as a proof of address:
§  Passport
  • Other National ID attested by Indian Embassy/Consulate/High Commission/Apostille
  • Bank account statement in country of residence, duly attested by Indian Embassy/High Commission / Consulate / Apostille in the country where applicant is located
  • Person of Indian Origin (PIO) card issued by Government of India
  • NRE bank account statement**
The filled application form has to be submitted at your nearest IT PAN Service Centre orTIN Facilitation Centre along with the requisite fee.
Also, there is a facillity to apply PAN online. Further, requests for changes or correction in PAN data or a request for a new PAN card (for an existing PAN) may also be made through the Internet.  If an application for allotment of PAN is submitted through the Internet and payment made through a 'nominated' credit/dbit card, the PAN is allotted on priority and communicated through email.
Advantanges of Having a PAN
The following are some of the benefits of having a PAN card:
  • PAN number acts as an Identity proof, showing your relation to India.
  • Even if you don't file taxes returns in India, you should still have a pan card.
  • Sale or purchase of immovable property valued at Rs 500,000 or more. If there are co-owners (buyer or seller), the PAN of both the owners will have to be mentioned. If a nominee holds the property, the PAN of the legal owner must be mentioned.   The PAN should be disclosed in the document pertaining to purchase or sale of the property
  • Sale or purchase of a motor vehicle requiring registration other than two-wheelers. This does not include vehicles running on fixed rails or special vehicles for use only in factories or in other enclosed premises or vehicles of less than four wheels with engine capacity of not more than 25 cc.
  • A time deposit of more than Rs.50,000 with any banking company and deposit of more than Rs.50,000 with post-office savings bank. This requirement is not mandatory when investing in post-office National Savings Certificate or Kisan Vikas Patra, and the PAN will be required only if the time deposit exceeds Rs.50,000.
  • Sale or purchase of securities including shares, bonds, debentures, derivatives, units of Mutual Funds and government securities.
  • Cash payment of Rs.50,000 or more for purchase of bank drafts, pay orders or bankers cheques during any one day.
  • Cash payment exceeding Rs.25,000 in connection with travel to any foreign country (fare or purchase of foreign currency).
  • Payment to hotels and restaurants against bills exceeding Rs.25,000 at any one time.
  • Opening a bank account.
  • A cash deposit of Rs.50,000 or more with any bank during any one day.
  • Payment of Rs.50,000 or more to a mutual fund for purchase of units or to a company for acquiring its shares or to a company/institution for acquiring its debentures/bonds or to RBI for acquiring bonds.
  •  As per the amendments in the income tax rules, coming into effect from July 1, quoting PAN (Permanent Account Number) will be mandatory for any payment of Rs 5 lakh or more for purchase of bullion or jewellery.
·          Tax will be deducted at 20% from your fixed deposit interest income for non-disclosure of your PAN. Whereas till now tax was deducted at 10% only from your fixed deposit interest income when interest earned on your deposit was more than Rs 10,000 in a year in case of Resident Indians                                 
·         Minor intending to open time deposit or bank account should quote the PAN of either father or mother or guardian in whose hands income is likely to be clubbed
Regards
Prakash Nair  

www.keralites.net   

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