Permanent Account Number or PAN, as it is popularly called, is a very important document required for carrying out financial transactions. Whether it is opening a bank account, depositing cash beyond a certain limit, applying for a credit card or doing any real estate transactions; all of these and many more situations mandatorily require you to quote your PAN.
PAN is a unique alphanumeric number issued by the Income Tax Department. PAN not only serves the purpose of being your identity in the financial world but also helps the IT department in keeping track and tabs on financial transactions carried out across the economy. PAN is a requirement for individuals and companies for carrying out financial transactions. However, the same is not required for Central and State Government Offices and Consular Offices.
The rules and procedures regarding PAN are constantly being updated to reflect the needs and requirements of the current day. In a similar fashion, some changes have been brought about in the rules and regulations for using a PAN since 05 Dec 2018.
Additional Reading: How to apply for a PAN card
As PAN is an important financial document, it is required that all individuals are well aware of the latest change in rules and regulations that are brought about by the Central Board of Direct Taxes from time to time.
Father's name is no more a mandatory requirement for PAN Applications
The need for quoting father's name in PAN application is no more a mandatory requirement. The Central Board of Direct Taxes has done away with this requirement. So, if you are applying for a PAN after 05 Dec 2018, you have an option to not give your father's name in the application.
This feature is made to accommodate those who have a mother as a single parent. The new application does away with the need to give your father's name if your mother has been a single parent. There is an option for the applicants wherein they can choose if their mother is a single parent and wish to furnish just the mother's name.
Non-individual entities should apply for a PAN Card by 31 May 2019
The Union Budget of 2018 has made it mandatory for non-individual entities who conduct transactions for more than Rs 2.5 Lakhs in a financial year to have a PAN Card. This was done by amending the Section 139(A) of Income Tax Act.
The need for PAN was brought into force with effect from 01 April 2018, but the date by which PAN needed to be applied was not notified earlier. With the current notification, that has been specified as 31 May 2019.
This rule has been brought in effect to avoid instances of tax evasion by small and medium businesses. So, in effect, anyone (individual or non-individual entities) making transactions of above Rs 2.5 Lakhs in a year will need to have a PAN number and Pan Card. The rule is applicable even for the current financial year, i.e. if a non-individual entity does a transaction above Rs 2.5 Lakhs in the current financial year, then application of PAN is mandatory by 31 May 2019.
The entities that would come into consideration following the recent rules are the managing directors, directors, partners, Karta of HUF, trustee, Chief executive officers or any such individuals who are authorized to act on behalf of a non-individual entity like companies, trusts, etc. If these individuals conduct transactions over Rs 2.5 Lakhs in a year, they would need to be issued a PAN.
Procedure for Applying PAN
Gone are the days when you had to fill out hard copies of Form 49A to apply for a PAN and send attested copies of supporting documents. You can now easily fill in your PAN application online and send in only an acknowledgment to the authorized agencies. National Securities Depository Limited (NSDL) or UTI Infrastructure Technology (UTIITL) are the two agencies authorized by the Department of Income Tax to accept PAN applications.
There are 3 ways in which you can fill in the online form on the sites of these agencies
1. Use E-KYC Method Through Aadhaar: You can use the online e-KYC method by which your photograph and signature will be pulled in from the Aadhaar data. In this case, you would not need to upload any supporting documents for the PAN application. But you will need to have your registered mobile number available with you to be able to authenticate the OTP.
2. Standalone E-Sign Method: In this method, you would need to upload your photograph, signature in black ink and all other supporting documents in prescribed format along with your online application.
3. Physical Documents Submission: There is also a third way wherein you can fill in the online application form and take a print of the same to submit it physically along with all other documents.
When the PAN is applied for non-individual entities, you would need to submit the certification of incorporation, registration or the partnership deed as the case may be.
For a Hindu Undivided Family (HUF), an affidavit made by the Karta of HUF stating name, father’s name, address of all the coparceners on the date of application, and copy of any of the above documents in the name of Karta of HUF are required as proof of identity, address and date of birth.
Additional Reading: How to Link Aadhaar Card with the PAN Card
Once you have filled in the forms with all the required details, you would need to pay the specified fee through your debit/credit card, net banking or other allowed modes of payment. Once the payment is through, you would need to take a print-out of the receipt with 15-digit acknowledgment number and post the same to the address as mentioned on the website (NSDL or UTIITL).
The PAN card is issued within a time frame of about 15 days from the date of receipt of documents. However, there has been a recent announcement by the CBDT saying that PAN would be issued as earlier as 4 days in the near future.