Permanent Account Number

Introduction

All organisations which are required to furnish return of income under section 139(4A) and (4C) should apply for a Permanent Account Number(PAN). As the name suggests, it is a taxpayer’s permanent identification number allotted by the income-tax department. PAN once allotted remains valid forever unless it is cancelled or changed by the department. Explanation to section 139A(8) defines PAN as “Permanent Account Number under the new series means a permanent account number having 10 alphanumeric characters and issued in the form of a laminated card”.

Necessity and uses of PAN

Under the existing law, it is absolutely necessary for all income- tax assessees to quote PAN in the following documents :

(i) in the income-tax return and in all other correspondences with the income-tax department.

(ii) in all challans for payment of any tax, interest and penalty due under the Income-tax Act.

(iii) in all documents related with the following transactions :

• Sale or purchase of any immovable property in excess of Rs. 10 lakh
• Properties valued by Stamp Valuation authority at amount exceeding Rs.10 lakh.
• Sale or purchase of a motor vehicle other than a two wheeler.
• Time deposit exceeding Rs. 50,000/- with a bank.
  -Deposits with Co-op Banks, Post Office, Nidhi, NBFC companies will also need PAN;
  -Deposits aggregating to more than Rs.5 lakh during the year will also need PAN
• sale or purchase of shares, stocks and other securities in excess of Rs. 1,00,000/-.
• opening of a bank account.
• payment to hotels and restrauants in excess of Rs. 25,000 at a time, but in case of cash payment exceeding Rs. 50,000 PAN is required.
• Cash deposit with banking company of Rs. 50,000 or above in a day.
• Payment exceeding Rs.50,000/- to RBI for acquiring its bonds.
• Purchase/ sale of any goods or services exceeding Rs.2 lakh per transaction.
• Payment exceeding Rs.50,000/- to a company/ institution for acquiring its debentures/ bonds.
• Payment exceeding Rs.50,000/- for purchase of mutual fund units.

Further, if any part of the income of the assessee is liable to deduction of tax at source, the assessee is required to intimate his PAN to the person responsible for deducting tax at source.

Application procedures

The application for allotment of PAN is required to be made in a revised format of Form No. 49A, application for fresh allotment/changes/correction in PAN can be made online. For online application please follow below mentioned procedure:

Step I: visit Portal of NSDL ( https://tin.tin.nsdl.com/pan/index.html ) or portal of UTITSL (https://www.pan.utiitsl.com/PAN/index.jsp) and select “Apply online”.

Step II: Carefully read the guidelines related to documents required and format of documents required.

Step III: Select Application type (Indian citizen- 49A/ foreign citizen- 49AA) and select category. Fill out the requisite details on the form (Fill all mandatory fields (marked with *))

Step IV: If the data submitted by applicant fails in any format level validation, a response indicating the error(s) will be displayed on the screen;

Step – V: Forms need to be re-submitted after rectifying the error(s);

Step – V: In case form level error(s) do not exists a confirmation screen with data filled by the applicant will be displayed.

Step – VI: In case applicant required any amendment to the data displayed in the confirmation screen, it may choose the edit option.

Step – VII: In case the displayed information is correct, applicant shall choose the confirm option.

Step – VIII: On successful payment of Fees (in case the mode of payment is other than DD or Cheque) an acknowledgment slip will be generated. The charges for applying for PAN is Rs. 93 (excluding GST) for Indian communication address and Rs. 864 (excluding GST) for foreign communication address.

Step – IX: Once the application and payment is accepted, the applicant is required to send the supporting documents through courier/post to NSDL/UTITSL. Only after the receipt of the documents, PAN application would be processed by NSDL/UTITSL.

Documents required

Three main documents are required for PAN application

1. Proof of Identity: documents accepted as proof of identity

• Voter’s ID card
• Passport
• Aadhar card
• Ration card having Applicant’s photo
• Driving License
• Photo ID card which are issued by central government, state government or any undertaking of public sector?
• A certificate issued by a bank that should be duly attested, containing applicant’s photo and the bank a/c number
• Central government health scheme card
• Pensioner card copy with applicant’s photograph

2. Proof of date of birth: documents accepted as proof of date of birth

• Birth certificate issued by any office that is certified for issuing Birth as well as Death Certificate, like Municipal Authority
• Birth Certificate issued by Indian Consulate
• Matriculation certificate from a recognized board
• Aadhaar Card
• Driving license
• Passport
• Certificate of Marriage issued from Marriage Registrar’s Office
• Pension payment order
• Domicile certificate issued by Government of India or any of the state governments
• Affidavit stating the DOB which is signed before a magistrate
• Photo identity card issued by the Central Government or State Government or Central Public Sector Undertaking or State Public Sector Undertaking.

3. Address proof: documents accepted as address proof are

• Electricity Bills
• Landline connection Bills
• Bills for Broadband connection
• Voter ID card containing photograph
• Aadhaar card
• Passport
• Passport of spouse
• Statements of Bank Account
• Statements of Credit Card
• Passbook of Post office account containing applicant’s address
• Latest order for property tax assessment
• Domicile certificate allotted by government
• Driving license
• Allotment letter of accommodation issued by Central or State Government of not more than three years old
• Property Registration Documents

Linking of Aadhar with PAN (mandatory requirement)

Every person who is eligible to obtain Aadhaar number shall, on or after the 1st day of July 2017, quote Aadhaar number—

• in the application form for allotment of permanent account number;
• in the return of income:

If at the time of application of PAN, person does not possess the Aadhaar Number, the Enrolment ID of Aadhaar application form issued at the time of enrolment shall be quoted in the application for PAN.

Every person already holding PAN as on the 1st day of July 2017, shall link Aadhaar with PAN within time allowed by the Central Government, otherwise PAN will become invalid.

Key issues under Application

• Do not use abbreviations for your name or do not use initials.
• Do not apply for a new PAN if you already have one.

Penalties

The Voluntary Organisations which fail to comply with the provisions of section 139A are subjected to penalty under section 272B, inserted by the Finance Act, 2002. A sum of Rs.10000 by way of penalty can be levied on such organisations after giving a reasonable opportunity of being heard. It may be noted that penalty is leviable not only for not applying for PAN, but also for (i) failure to quote PAN in the prescribed documents, or (ii) failure to intimate such PAN when required, or (iii) quoting or intimating a number which is false. Penalty is however not leviable if the assessee proves that there was reasonable cause for the failure.