RPS Walia is an Ex PCS Officer and holds Bachlores of Law from Punjab University apart from Masters in Sciences & Phillosophy Click Read More
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What is PAN
What is PAN - Permanent Account Number?
RPS Walia - P.C.S. (retd), LLB, MSc, M. Phill
Permanent Account Number or PAN of India is a unique 10-digit alphanumeric identity allotted to each Taxpayer under the Income Tax Act 1961. It is issued by the Income Tax Department under the supervision of the Central Board of Direct Taxes (CBDT). This piece of identity is required by any individual or legal entity who wish to conduct any kind of financial or business in India. In brief the PAN is mandatory and legal requirement for all monetary transactions such as receiving taxable salary/pension/professional fee, sale or purchase of property, buying mutual funds or even opening of a bank account.
The primary objective of the PAN is to use a universal identification key to track financial transactions and prevent tax evasion. The PAN number remains unaffected by change of address throughout India or even outside India. In a way PAN is unique, national, international and permanent.
Usually NRI, PIO or OCI have doubts as to if they require PAN for entering the Indian financial market. Under the requirement of law with effect from April, 2007, even NRI need to quote PAN for conducting any financial in India. All non-residents residing world over, have to maintain financial relationships with kith and kin in India. The quantum of financial transactions may vary from person to person but cannot be ignored. Hence PAN is an important requirement which every NRI should hold for immediate and future financial transaction in India. PAN of India can be compared to SSN (SOCIAL SECURITY NUMBER) of USA and SIN (SOCIAL INSURANCE NUMBER) of Canada.
Can NRI apply for PAN cards Online?
Yes, Income Tax Department of Govt. of India has taken e-Governance initiative under which various Citizen Centric Services are being provided including submission of PAN application online for both residents and non-residents. Applications for fresh application and correction thereof can be made through the portal of National Securities Depository Centre (NSDC) or portal of UTI Infrastructure Technology and Services Limited (UTIITSL). The charges for applying for PAN online are the same i.e. Rs 105 for Indian communication address and Rs971 for foreign communication address. Payment can be made through debit/credit card or by net –banking. Once the application is accepted, the applicant is required to send the supporting documents through post to the offices of NSDL/UTIITSL on the addresses available at www.incometaxindia.gov.in . Only after the receipt of the document, PAN application is processed and the allotment of the PAN is conveyed to the applicant within 5days through email. It is always advisable to apply for the allotment of PAN card in time so that the document is available at the time of need.
Tax liabilities of NRIs in financial transactions:
Under the provisions of law as effective with effect from April1, 2010, every non-resident that receives income from India is required to obtain PAN from the Indian Income Tax Department and provide it to the Indian Payor. The Payor is required to deduct the taxes at the minimum of 20% of the value. However, a NRI can make an advance application to the income tax authorities to determine in advance the appropriate withholding tax rate. A Payer’s failure to withheld taxes can result in disallowance of the expense on its tax return and exposes to interest, penalize and liabilities of the tax amount. It is very important to note that if a NRI believe that no tax is owned by him, he must file the return for the refund of the tax withheld with the income tax authorities.
Benefits of a PAN card
• It is an identity proof while in India.
• It is compulsory for sale or purchase of immovable property valued at Rs 5, 00,000/- or more. If there are co-owners (buyer or seller), the PAN of both the owners will have to be mentioned. If nominee conducts the property transactions, the PAN of legal owner has to be mentioned.
• It is required for the purchase of motor vehicle other than two wheelers.
• It is required for deposit of Rs 50,000/- or more with any bank or post office.
• It is mandatory for the Installation of telephone or cellular telephone.
• It is required for opening of bank account or issue of credit card.
• It is required to deposit in cash Rs 50,000/- or more in mutual fund, for acquiring the shares or bonds of a company or to purchase Capital Tax Relief Bonds.
• In case of minor, the PAN of either father or mother or guardian in whose hands income is likely to be clubbed.