Easier Norms for Overseas Nationals to Obtain Indian PAN
Sept. 13 – In an attempt to develop greater fund flows and offer some steadiness to the irregular Indian bourses, India’s Finance Ministry has tranquilized norms for foreign nationals and foreign institutional investors (FIIs) to obtain permanent account numbers (PANs) that could also double up as know-your-customer (KYC) compliance for any investment they make in Indian stocks.
Presently, FIIs or foreign citizens had to attain a PAN and separately meet KYC necessities prescribed by the market regulator before investing in stocks. The tax obligation on any transaction is twice the amount due if they don’t mention PAN details.
In the amended rules that come into effect from October 1, 2011, an overseas national will have to only produce either her/his citizenship number or taxpayer identification number to obtain a PAN. The government is making adjustments in Rule 114 and Form 49A of the Income Tax Rules and has proposed to introduce a new Form 49AA. While Form 49A will be used for Indian citizens, the added form (49AA) is for foreign nationals and FIIs.
Previously, regulations stipulated that citizenship or taxpayer identification numbers would not be established as proof of identity in case of foreign nationals seeking a PAN card. The candidate is required to take prescribed documents to an officer of the Indian Embassy or High Commission where he is a resident to get them attested.
The amended guiding principles guarantee that a foreign national or an FII need not make rounds of Indian Embassies or High Commissions anymore. They can get copies of their documents attested by recognized authorities in their native countries. Several countries and trade and industry organizations had approached the Finance Ministry seeking changes in the rules, in particular documents to be accepted as proof of identity and address and their attestation.
The department of economic affairs and the central board of direct taxes (CBDT) also worked on balancing the necessities of PAN and meeting KYC obligation.
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