Changes in PAN Rules

The Income Tax department has put into effect new rules with respect to Permanent Account Number (PAN) from 5th December, 2018 to prevent tax evasion and to provide flexibility to taxpayers. Earlier this year in the month of November, the Central Board of Direct Taxes (CBDT) had issued a notification stating the amendments in Income Tax Rules, 1962 that come into effect today.
The crucial new PAN card rules are given below:

  1. From now on it is mandatory for a resident person other than an individual such as Hindu Undivided Family (HUF), firm, charitable trusts, association of persons (AOP), body of individuals, company or a local authority who are dealing in financial transactions of more than INR 2.50 lakhs and who has not been allotted any PAN, shall apply for one before May 31 of next financial year.
  1. Any person, who is the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer of the above mentioned entities or any person competent to act on behalf of such entities and who has not been allotted any PAN, shall apply for the same before May 31 of the financial year following the fiscal in which the entities specified above enter into financial transaction amounting of INR 2.50 lakhs or more.
  1. Further, from now on mentioning the father’s name in the PAN application will not be mandatory for the applicants whose mother is a single parent. Also, the new application forms i.e. 49A (for Indians) and 49AA (for foreign nationals) will have the option for all applicants to choose whether they want their father’s or mother’s name to be shown on their PAN card. If no option has been selected in the application form, the father’s name will be shown on the PAN card.
Meanwhile, the tax department is also looking to introduce technology and automation based reforms to make tax return filing easier. According to Sushil Chandra, chairman of CBDT, citizens in near future could get their PAN card within four hours of application. This move will encourage people who shy away from paying taxes due to the complexity of filling tax returns and with pre-filled forms, people who have their taxes deducted at the source could also do away with the need for enlisting the services of a tax professional.