(I.)Introduction

Permanent Account Number (PAN) is a code that acts as an identification for individuals, families and corporates (Indian and Foreign as well), especially those who are Income Tax payers.

It is a unique, 10-character alpha-numeric identifier, issued to all judicial entities identifiable under the Indian Income Tax Act, 1961. The Income Tax PAN code and its linked card are issued under Section 139A of the Income Tax Act. It is issued by the Indian Income Tax Department under the supervision of the Central Board of Direct Taxes (CBDT) and it also serves as an important proof of identification. It is also issued to foreign nationals (such as investors) subject to a valid visa, and hence that PAN is not acceptable as a proof of Indian citizenship.

The PAN is mandatory for a majority of financial transactions such as opening a bank account, receiving taxable salary or professional fees, sale or purchase of assets above specified limits etc.; especially high-value transactions.

The primary purpose of the PAN is to bring a universal identification to all financial transactions and to prevent tax evasion by keeping track of monetary transactions, especially those of high-net-worth individuals who can impact the economy. The PAN is unique to each individual and is valid for the lifetime of the holder, throughout India. Since a PAN is linked to an individual, a point worth to mention is that the PAN code is therefore not affected by any change of address.

(II,)Changes

There a few changes regarding the Permanent Account Number (PAN) that came into effect from December 5. The changes were notified by the income tax department through a notification dated November 19, 2018. Since PAN is an important ID proof to conduct even the most basic of financial transactions, it is important that the general public and tax payers are aware of the developments. Here’s a brief look at what the new rules state.

(III.)Father’s name not mandatory for PAN application

If you are going to apply for PAN on or after December 5, 2018, then you will not be required to mandatorily quote your father's name in the application form. This rule will 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 the applicant wishes to furnish the name of only his single mother. The Central Board of Direct Taxes (CBDT) has amended the income tax rules relating to it through a notification dating November 18.

(IV.)Non-individual entities to apply for PAN by 31.03.2019

This year Budget 2018 had amended the Section 139A of the Income Tax Act making it mandatory for non-individuals who have conducted transactions above Rs 2.5 lakh in a fiscal to mandatorily get PAN. This requirement came into effect from April 1, 2018. However, the date by which they have to apply for PAN was not notified. Now with the amendment in Rule 114, this date has been notified which is May 31 of the of the next FY. The date of May 31 was notified via the above mentioned where it was stated that this rule will come into effect from December 5.

Non-individual entities conducting 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 next financial year. This means that if a Hindu Undivided Entity (HUF) or any other 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 PAN.

Notification further states that an individual who is the managing director, director, partner, trustee, author, founder, “karta”, chief executive officer, principal officer or office bearer or any person competent to act on behalf of the non-individual (who conducts the transaction of Rs 2.5 lakh or above in a single financial year) and has not been allotted any PAN, will also be required to apply for PAN on or before May 31 of the following financial year.

(V.)Further Planning: PAN Card in four hours

According to reputed sources, anyone could get their PAN card in four hours. The CBDT chairman, Sushil Chandra confirmed that this plan is under development while addressing industry conference. The allotment of PAN in four hours is expected to start as early as within a year.