Local DIN Holders in India Need to Submit PAN

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May 9 – Earlier, India’s permanent account number (PAN) system was not the mandatory field for directors identification number DIN-1 eForm. So in order to avoid Duplicate DIN, it has been decided that all the DIN holders who have not furnished their PAN earlier at the time of obtaining DIN, are required to furnish their PAN by filing an DIN-4 eForm by May 31, 2011. However, foreign nationals who have been allotted DIN earlier are not required to furnish PAN.

Definition of permanent account number
Permanent account number is an exclusive alphanumeric combination issued to all juristic entities identifiable under the Indian Income Tax Act 1961. It is issued by the Indian Income Tax Department under the auspices of the Central Board for Direct Taxes (CBDT) and is almost equivalent to a national identification number. It also serves as an important proof of ID.

This number is almost mandatory for financial transactions such as opening a bank account, receiving a taxable salary or professional fees, sale or purchase of assets above specified limits. The primary purpose of PAN is to bring a universal identification key factor for all financial transactions and indirectly prevent tax evasion by keeping a track of monetary transactions of high net worth individuals.

The PAN is unique, national, and permanent. It is unaffected by a change of address, even between states.

This number can be considered to be similar to the social security number issued in the United States to citizens and other legal residents.

Common uses of PAN card
As the IT department made it mandatory to have a PAN card to file your annual income returns, it is easy to count many uses of PAN card. The main and important use is it proves that you are ideal citizen and you are following the rule of nation.

The PAN card is a document issued by the Department of Income Tax of India and its number is used to file an income tax return and in many more places like bank transactions, applying for mutual fund, share, De-mate account, stock transaction etc. It is used for all financial transactions including salary credits.

The PAN card in India serves as your lifetime national ID card and for banking transaction above 20,000, one has to quote his/her PAN, it is mandatory! For purchasing any motor car or vehicle, PAN is compulsory. For purchasing any land in India one has to quote his/her PAN while registering it.

Definition of directors identification number
Director identification number is a unique identification number for an existing director or a person intending to become the director of a company. In the scenario of e-filing, DIN will be a pre-requisite for filing of certain company related documents. It’s an eight figure numeric number.

Uses of director identification number
Any individual who is a director or intends to become a director of a company should apply for DIN. All the directors of a company must obtain a DIN. It is mandatory for e-filing of forms and documents and PAN cannot be used as an alternative to DIN.

DIN is mandatory for directors of Indian companies who are not citizens of India, but is not mandatory for directors of foreign companies who have branch offices in India.

Only a single DIN is required for an individual, irrespective of number of directorship held by him/her. All the directorships of an individual would be mapped in the database through that DIN. Even on resignation of a director the DIN will not be cancelled.

Process for obtaining a director identification number
DIN means a unique identification number allotted by the Government to any individual intending to be appointed as a director of company, for purpose of his identification as such.

No company shall appoint or reappoint any individual as a director unless he has been allotted DIN u/s 266B of the Companies’ Act 1956.

The process of obtaining DIN has been simplified by making it online by filling in the DIN-1 eForm. If DIN-1 has been digitally signed by the practicing chartered accountant, company secretary or cost accountant, verifying the particulars of the applicant given in the application, then the DIN will be allotted on real time basis at the same time.

However in other cases, where the DIN form is digitally signed by the applicant, the applications are disposed off in one or two days after examination by the central government.

The following fields in DIN-1 eForm will be mandatory

  1. Name of the applicant
  2. Father’s name of the applicant
  3. Date of birth
  4. Income tax permanent account number (PAN) in case of all Indian nationals
  5. Passport in case of all foreign nationals.

Dezan Shira & Associates is boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in India. To contact the firm, please email india@dezshira.com, visit www.dezshira.com, or download the firm’s brochure here.

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