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The Central Board of Direct Taxes (CBDT) through a notification has amended the income tax rules and the said rules came into effective from December 5, 2018. So it is very important to know about the changes that have been made, so that you don’t end up in the wrong side of the law. In the below article, we would be discussing about the new PAN card rules and how PAN (Permanent Account Number) will play an important role in the above changes.
Earlier, with a view to expand the tax base, to bring more transparency and prevent tax evasion, the government had amended few of the provisions related to the PAN card in the Budget 2018 and have now expanded the scope of persons who would now be mandatorily required to obtain PAN.
From December 5, there have been few changes which have been implemented regarding the Permanent Account Number (PAN). These changes were notified by the Income Tax Department through a notification dated November 19, 2018. Since PAN is an important identity proof to conduct even the most basic of financial transactions, it is important that you are aware of these changes.
Now going into the details let’s discuss the basics of PAN for your better understanding of this article.
PAN (Permanent Account Number), is a unique 10-digit alphanumeric identity which is allotted to each taxpayer by the Income Tax Department under the supervision of the Central Board of Direct Taxes (CBDT). It also serves as an identity proof for the citizen of India.
Generally, PAN cards are mandatory for any kind of financial transaction above Rs 2 lakh and for a lot of other activities like the opening of a bank account and are also used as an identity proof.
Let us have a look at what the new rules state:
Confused regarding the above? So let’s get aware of new PAN card rules in detail.
Any Non-individual entities who if anytime conducts transactions of Rs 2.5 lakh or more in a single financial year will now have to mandatorily get PAN before May 31 of the year 2019 which means that if a Hindu Undivided Entity (HUF) or any other type of entity enters into a financial transaction of Rs 2.5 lakh or more during FY 2018-19, then they have time till May 31, 2019 to apply for the PAN.
If you are going to apply for PAN now i.e after December 5, 2018, then you will not be required to mandatorily quote your father’s name in the application form. This rule will only be applicable if the mother of the applicant is a single parent. The application form will now give the applicant an option as to whether the mother is a single parent and as a result of which the applicant wishes to furnish the name of only his mother and not of the father.
Central Board of Direct Tax (CBDT) added another option (i.e. ‘Transgender’) in Gender column of Form 49A/ 49AA which is used for the PAN Application. Earlier only the options of ‘Male and Female’ for Individual Applicants were provided. It results in promoting equal rights for every citizen. So now, the PAN application form is having the option of Transgender, in addition to Male & Female.
In the case of a non resident person, who is the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer of the person, or any person who is competent to act on behalf of the person referred, who does not have a permanent account number, on or before the 31st May, must immediately apply for a PAN Card if the person wants to enter into any financial transaction.
The new PAN card rules are expected to widen the tax base in India and help the government and tax authorities to have more control on entities entering into financial transactions above the specified or permissible limit and taking benefit of legislative loopholes which are prevalent in India.
You must note down the above rules in case the above amendments affect you in any way. The above notifications are mandatory and need to be followed as per the Government of India.
Coming to the conclusion now you’re going to get a PAN Card in four hours. This change is expected to start within a year.