The permanent account number or PAN has grown in importance and is today a vital part of any financial transaction. The tax department allots the PAN to an individual for the purpose of identification and to relate to various transactions and information pertaining to him.
If your income exceeds the basic exemption limit, you should apply for PAN by May 31 of the relevant assessment year. Any person whose turnover or gross receipts exceed Rs 500,000 and specified charitable trusts should apply for PAN before the end of the said accounting year. Employers filing returns for fringe benefits have no time limit set to apply for PAN.
Apart from the above, importers, exporters and those applying for registration under the Central Excise Rules, 1944, Service Tax Rules, 1994, Central Sales Tax Act or the State Sales Tax law also have to apply for the PAN.
Using PAN. All returns, quarterly statements, challans or correspondence with the income tax authorities should include the PAN. It is necessary to quote the PAN in documents related to the following transactions:
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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.
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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.
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Contract of sale or purchase of securities exceeding Rs 1 lakh in value, including shares, bonds, debentures, derivatives, units and government securities.
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Cash payment of Rs 50,000 or more for purchase of bank drafts, pay orders or bankersÕ cheques during any one day.
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Cash payment exceeding Rs 25,000 in connection with travel to any foreign country (fare or purchase of foreign currency).
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Application for installation of telephone, including cellular telephone.
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Payment to hotels and restaurants against bills exceeding Rs 25,000 at any one time.
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Opening a bank account.
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Application for issue of a credit card.
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A cash deposit of Rs 50,000 or more with any bank during any one day.
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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.
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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.
The exceptions. While the PAN is asked for in almost all financial transactions, it is possible to conduct some transactions without it if you provide Form 60 or Form 61 (for agriculturists).
A declaration in Form 60 will have to be issued to the registering authority for purchase and sale of immovable property or motor vehicles, or to the bank, broker, telephone provider, hotel or travel agent wherever necessary.
Non-resident Indians and agriculturists (who can furnish Form 61) are exempt from quoting the PAN. The central or state government or consular offices need not mention the PAN if they are the payer, but the provision will apply if they are the recipient.
Forms 60 and 61 must be verified by the recipient and sent to the Commissioner of Income Tax (Central Information Branch) by 31 October (forms received up to 30 September) or 30 April (forms received up to 31 March).
Any person (other than non-residents) who receives any sum or income or amount from which tax has been deducted must provide the PAN to the person/organisation that has deducted tax at source as per Section 139(5A).
Similarly, every buyer of specified goods like alcoholic liquor, tendu leaves, timber, forest produce and scrap for trading and every licensee or lessee of parking lots, toll plazas, mines or quarries, has to provide the PAN to the seller/licensor. Any person who has deducted tax at source must quote the PAN of the payee in all the TDS certificates, TDS returns and statements of perquisites and profits in lieu of salary (Section 139(5B)).
It is obligatory to mention the PAN on all these forms and it is advisable that the payer intimate the payee in case of non-receipt of the PAN.
The requirement of quoting the PAN under Section 139(5A) will not apply to a person whose income is not taxable or who is not required to obtain the PAN under any provision of the act.
Such a person has to furnish a declaration under Section 197A in Form 15G/15H that tax on his income will be nil. But any person, other than senior citizens, whose aggregate income from dividend, interest, withdrawal of deposits with NSS and income in respect of units exceeds the basic exemption limit cannot furnish Form 15G for non-deduction. Anyone who violates the above provision or quotes a false PAN will be fined Rs 10,000 for each default or failure.;
The author is a member of the Bombay Chartered Accountants Society
