1. MEANING (PAN)
The provisions of Section 139A of the Income Tax Act, to be read with Rule 114 of the Income Tax Rules deal with the requirement of application and obtaining of Permanent Account Number.
PAN is a 10 digit code allotted to each essessee by I.T. Dept.
Quoting of the Permanent Account Number (PAN) has been made mandatory by the I.T. Department in many instances. An assessee needs to mention his PAN in his return.
A person has to apply in Form 49A to the Assessing Office having jurisdiction to assess the applicant. In order to improve PAN related services, the Dept. has authorized UTI Investor Services Ltd.( UTISIL) to manage IT PAN Services Centers in all cities or towns where there is an Income Tax Office, and National Securities Depository Limited (NSDL) to dispense PAN services.
The main advantages of having a PAN include, convenience to locate the Assessing Officer, Faster Assessment , Processing of Refunds, ensuring Tax Compliance, Credit for Payment of Taxes, and Control over unregulated and Undisclosed Transactions.
The application form should be filled in carefully and completely giving specified information, including name of the assessee, father’s name , address, date of birth, sources of income, etc.
2. Mandatory requirement to obtain PAN
Under the provisions of the said section, every person inter alia whose total income during the previous year exceeds the maximum amount which is not chargeable to tax (i.e. Rs. 1,60,000 for Individual or Rs.1,90,000 for woman or Rs.2,40,000 for senior citizen as the case may be for the Assessment Year 2010-11) or in case of person carrying on business or profession whose total turnover or gross receipts are likely to exceed Rs.5,00,000 during any previous year and who has not been allotted Permanent Account Number are required to make an application in Form No.49A. The said application for PAN shall be made on or before May 31 of the relevant assessment year in case of assessee whose total income exceeds exempted limit and in other cases, before the end of that Accounting Year. The application shall be accompanied by proof of identity and proof of address. Further the Central Government can specify the class of persons who should apply for the allotment of Permanent Account Number.
Further with effect from June 1, 2006, the Assessing officer may also allot PAN to any person as he deemed necessary. Every person deducting TDS or TCS shall quote the PAN number of deductee in all Returns. Central Government can also specify the class of persons who should apply to PAN.
3 Requirement to Quote PAN
After the allotment of Permanent Account Number, it is the duty of every person to quote the same in all his Returns or correspondence with income-tax authorities and in all challans for payment of any sum to the Department and in all such transactions as may be prescribed by the Central Board of Direct Tax (CBDT) from time to time.
3.1 The Permanent Account Number need to be mentioned in the following cases.
• Every person who receives any income or sum which is liable to deduction of tax at source shall intimate his Permanent Account Number to the person responsible for deduction of tax at source.
• Every person responsible for deduction of tax at source who pays amount such deduction shall quote the Permanent Account Numbei of the person to whom such amount is paid in the Statements. Certificates, Returns prepared and given under Section 192, 203 and 206.
• Every buyer who deals with the seller carrying on the business of Alcoholic Liquor, Forest Produce, Scrap etc. shall intimate his Permanent Account Number.
• Every seller who carries on the business of Alcoholic Liquor, he Forest Produce, Scrap etc. shall quote the Permanent Account or Number of buyer in all Certificates and Returns prepared and given under Sec. 206C.
3.2 Further there is a mandatory requirement to quote Permanent Account Number (Rule 114B) in all documents pertaining to the following transactions.
• Sale or puchase of any immovable property whose valuation is Rs.5,00,000 or more.
• Sale or purchase of a Motor Vehicle which is to be registered with Road Transport Authority (Two Wheeled Vehicle excluded).
• A Time Deposit exceeding Rs.50,000 with any Bank to which the Banking Regulation Act applies.
• A Deposit exceeding Rs.50,000 with Post Office Savings Bank.
• A contract of a value exceeding Rs.1,00,000 for sale or purchase of securities.
• To open an Account with a Bank to which the Banking Regulation th Act applies.
• Application for installation of Telephone Connection or Cellular Phone Connection.
• Payment of Bills to Hotels and Restaurants for an amount exceeding Rs.25,000 at any one time.
• Payment in cash in order to purchase bank drafts or pay orders for an amount aggregating Rs.50,000 or more during any one day.
• Deposit in cash aggregating Rs.50,000 or more with a bank during any one day.
• Payment in cash for a travel to any foreign country of an amount exceeding Rs.25,000 at any one point of time. (Travel to Bangladesh, Bhutan, Maldives, Nepal, Pakistan or Sri Lanka and travel to Saudi Arabia for Haj or travel to China for Piligrimage to Kailash, Mansarover are excluded).
• Application to any banking company or other institution for issue of credit card.
• Payment of Rs.50,000 or more to a Mutual Fund for purchase of its units.
• Payment of Rs.50000 or more to a company for subscribing
• Payment of Rs.50,000 or more to a company or an institution or Reserve Bank of India for subscribing bonds / debentures.
Any person who has not been allotted a Permanent Account Number and who makes the payment in cash shall give a declaration in Form No.60 specifying therein the particulars of such transaction. However if the payment is made by way of Crossed Cheque, Crossed Demand Draft or through a Bank Credit Card, no declaration in Form No.60 is required.
4. Provisions of Section 139A are not applicable
The provisions of Section 139A are not applicable to persons who have Agricultural Income alone and who make declaration in Form No. 61, Non-Residents and Central Government, State Government, Consular Officers in transactions where they are payers (Rule 1 14C).
5. Penalty for non-compliance (Sec. 272B)
If any persons fails to comply with the provisions of Section 139A
or quotes or intimates a false Permanent Account Number (PAN), he shall be liable to pay by way penalty a sum of Ten Thousand Rupees.
6. Following Assessee should Own or Obtain PAN :
1. Every person whose total Income exceeds the Taxable Limit.
2. Every Business or Profession whose total Sales, Turnover, or Gross receipts exceed Rs. 5 Lakhs.
3. Every person shall quote his PAN or GIR in all documents pertaining to :
a) Who Sales / Purchases any immovable property worth Rs.5 Lakhs or more.
b) Who Sells or Purchases Motor Vehicle or Vehicle which require registration.
c) Who opens a Time Deposit Account with Banks / Post Offices exceeding Rs. 50,000
d) Who deposits amount exceeding Rs.50,000 in Post Office Savings Bank.
e) Who Sales or Purchases Securities exceeding Rs. 1 Lakh.
f) Who opens a Bank Account * .
g) Who makes payment to Hotels & Restaurants against bills exceeding Rs.25,000 at a time.
h) Who wants to purchase DD/Pay Order/ Banker’s Cheque by payment of cash aggregate Rs. 50,000 or more during any one day from a Bank.
i) Payment in cash exceeding Rs.25,000 in connection with Foreign Travel.
j) Payment of an amount of Rs.50,000 or more to buy Mutual Fund, Shares, Debentures or Bonds.
k) Buying high-end consumer good
Any person who has not been allotted PAN and who makes payment in cash otherwise than by way of Nc payee cheque or draft or issued by any Bank in respect of any of the above listed transaction, should file a simple declaration in Form No. 60 giving the particulars of the transaction.
The declarant is required to furnish proof of residence in the form of copy of Ration Card, Passport, Driving License, Identity Card issued by an Institution, Copy of Electricity Bill or Telephone Bill, or any document or communication from a Central or State Government Authority or Local Body, along with the declaration in Form 60 or 61.
* Those not having PAN/GIR No. can submit a simple declaration in Form No. 60/61.
Any person who has not been allotted PAN/GIR No. and who makes payment in cash otherwise than by way of A/c payee Cheque or Draft or issued by any Bank in respect of any of the above listed transaction, should file a simple declaration in Form No. 60 giving the particulars of the transaction.
DON’T FORGET PAN :
Govt. proposes to issue a Permanent Account Number (PAN) , suo moto, if the concern authority discovers that PAN has not been mentioned for specific transaction where it is mandatory to do so. The person will be issued a PAN by the Assessing Officer. For non furnishing or incorrect PAN a penalty of Rs.10,000 is levied.