Permanent Account Number (PAN) is the most important financial document in the country and it is becoming extremely important documents which will link all the transactions made by an individual with the Income Tax Department. It is a ten-digit alphanumeric identifier, issued by Income Tax Department. Each assessee (e.g. individual, firm, company etc.) is issued a unique PAN.
It is to be noted that PAN essentially helps the income tax department ‘identify’ the person or a company undertaking the transaction such as payment of tax, depositing or withdrawing money from a bank or any of the specified transaction. All existing taxpayers who are required to file an income tax return, even on behalf of others, must have a PAN.
Anyone who intends to enter into economic or financial transactions where quoting PAN is mandatory, must have a PAN. In Budget 2019, several PAN related changes were announced which are yet to be ratified by parliament. Here are some PAN that one needs to be aware of in order to avoid penalties:
1. Single PAN: As per the tax department, one individual must have only one PAN card. Obtaining/possessing more than one PAN is against the law and may attract a penalty up to Rs 10,000. Therefore, it is advisable not to obtain/possess more than one PAN.
If you have more than one PAN, you may fill and submit ‘PAN Change Request’ application form by mentioning the PAN which you are using currently on top of the form. All other PAN/s inadvertently allotted to you should be mentioned at item no. 11 of the form and the corresponding PAN card copy or copies should be submitted for cancellation along with the form.
2. Linking PAN with Aadhaar: Currently, under Section 139AA (2) of the Income Tax Act, the PAN allotted to a person shall be deemed to be ‘invalid’, in case the person fails to intimate the Aadhaar number. However, going forward, if a person fails to link their Aadhaar number with PAN, the PAN card will be made ‘inoperative’. The last date to link PAN with Aadhaar is September 30, 2019.
It is worth mentioning that while the last date for linking is 30th September, as per Union Budget 2019, the operative word has been proposed to be changed from ‘invalid’ to ‘Inoperative’, with effect from September 1, 2019.
3. TDS deduction for a professional job: If you have hired a professional contractor for the construction of your house or a designer, architect or any professional for personal use, the new PAN rule required you to deduct TDS before making the final payment. The TDS amount is to be deposited with the government using the PAN of the professional.
At present, individuals are not required to deduct TDS on any payment made to a contractor or professional when it is for personal use. In case the individual is carrying on business or profession which does not require to be audited, there is no obligation for TDS to be deducted, even if the payment is for business or profession….Read more>>