New Delhi: The Central Board of Direct Taxes (CBDT) through a notification has amended the income tax rules and said the new rules would come into effect from December 5.
PAN cards are mandatory for any transaction above Rs 2 lakh and for a lot of other activities like opening of a bank account and as identity proof.
“In exercise of the powers conferred by section 139A read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Boar d of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962,” CBDT circular said.
“These rules may be called the Income–tax (Twelf th Amendment) Rules, 2018,” it added.
Here's all about the new PAN card rules that will kick in from 5 December
The notification has made it mandatory for entities that have made financial transactions worth Rs 2.5 lakh or more in a financial year to apply for a PAN card. The application has to be filed on or before May 31 of the assessment year for which such income is assessable.
The CBDT circular said that in the case of a person, being a resident, other than an individual, which enters into a financial transaction of Rs Rs 2.5 lakh or more in a financial year and does not have a permanent account number, on or before the 31st May, must immediately do so of the following financial year.
The resident entities shall have to obtain PAN even if the total sales/ turnover/ gross receipts are not or are not likely to exceed Rs 5 lakh in a financial year. This will help the income tax department track financial transaction, broaden its tax base and prevent tax evasion.
In the case of a person, who is the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer of the person, or any person competent to act on behalf of the person referred, who does not have a permanent account number, on or before the 31st May, must immediately apply for a PAN Card following the financial year in which the person referred enters into financial transaction.
The income tax department has also done away with mandatory quoting of father's name for PAN applications. The I-T department said quoting of father's name in PAN application forms will not be mandatory in cases where mother of the applicant is a single parent. Currently, furnishing father's name is mandatory for the allotment of Permanent Account Number (PAN)