- Date : 26/11/2018
- Read: 3 mins
One of the rules eliminates the mandatory inclusion of the father’s name for PAN applications if the applicant’s parent is a single mother
The Central Board of Direct Taxes (CBDT) has made a few amendments to the Income Tax rules applicable to those desirous of getting a new PAN (Permanent Account Number). These new rules will come into effect from 5th December 2018.
A PAN card is a government-issued document that acts as a valid proof of identity. It is mandatory to quote your PAN for activities such as opening a bank account, purchase and sale of assets/investments, filing Income Tax returns, and for financial transactions above a certain threshold as specified by the RBI.
The new rules as notified by the CBDT will come into effect as the Twelfth Amendment of the Income Tax rules. The changes are mentioned below:
- Name on PAN: The IT department has eliminated the mandatory inclusion of the father’s name for PAN applications in certain cases, such as when the applicant’s parent is a single mother. It will be optional to include the father’s name in the application form if the applicant’s father is separated or deceased.
Most of the additional changes do not apply to resident individuals who are not associated with a business entity.
- Broadening the tax base: All resident business entities will have to obtain a PAN even if the total sales or turnover in a financial year does not exceed Rs 5 lakh. This exercise is expected to broaden the tax base by making financial tracking easier, thereby preventing tax evasion.
- Annual Sales: The notification has also made it mandatory for businesses that have made financial transactions above Rs 2.5 lakh in a financial year to apply for a PAN. The application has to be made on or before 31st May of the financial year in which such income becomes assessable.
- Individual transactions: Similarly, any financial transaction above Rs 2.5 lakh has to be validated with a PAN. Businesses that do not have a PAN need to file for one on or before 31st May of the following financial year.
- Key personnel: In case of an individual who is a founder, partner, trustee, karta, author, director, managing director, chief executive officer, office bearer, or any person who is competent to act on behalf of the aforementioned person, and does not have a PAN card, must apply for one on priority on or before 31st May of the following financial year.