India PAN Numbers and Application Procedures for Foreign Investors
By Dezan Shira & Associates
Editor’s Note: The article was first published in August 2013 has been updated as of December 29, 2016 to incorporate the latest changes.
In India, the permanent account number (PAN) is a ten character alphanumeric code combination allotted by the Indian Income Tax Authorities to individuals and registered entities. The PAN’s key function is as an all-in-one form of identification, but it also acts as a factor for all financial transactions; thereby maintaining a track-record of an individual’s financial transactions. Through this, PANs help in avoiding tax evasion and also support compliance of applicable laws.
All foreign directors or responsible persons engaged by the Indian subsidiary of a foreign-invested business must register for a PAN if they wish to operate their company accounts, regardless of whether they are based in India or not.
For obtaining a PAN, the Income Tax department has authorized:
- UTI Technology Services Ltd to set up and manage IT PAN Service Centers in every city or town where there is an income tax office; and
- NSDL e-Governance Infrastructure Ltd to dispense PAN services from tax information network facilitation centers.
Indian Income Tax Law mandates that the following types of individuals should apply for a PAN:
- Every person whose total income exceeds the maximum amount not chargeable to tax;
- Every person who carries on any business or profession whose total turnover or gross receipts exceed the threshold limit in a year; or
- Any person required to a file a return of income.
PAN applications are made through forms, designated separately for individuals and foreign nationals. Form 49A is for Indian citizens and Form 49AA is for foreign nationals.
In order to apply for a PAN in the first place, basic information such as name, address (both permanent and official), contact number, valid E-mail address, father’s name, and date of birth are required, in addition to the provision of supporting material including a photograph. However, requirement for documents do differ regionally and also depend on the applicant’s status.
Documents Required for PAN Application – Individuals
In case of individuals, two passport size photographs are required along with the following:
Identification (one of the following)
- Voter identity card
- Driving license
- Aadhaar card (issued by Unique Identification Authority of India)
- Bank certificate on original letter head from the bank branch with photograph and bank account number of the applicant
Residential Proof (one of the following)
- Bank account statement or passbook
- Credit card
- Water and electricity bill
- Ration card
- Voter identity card
- Driving license
- Aadhaar card
- Employer certificate
- Matriculation certificate
Specific Requirements for Foreign Nationals
In case of individuals not being a citizen of India, the address for an individual foreign national and the following documents need to be notarized and apostiled by the Indian Embassy in their own country:
- Copy of passport
- Copy of Person of Indian Origin Card issued by Government of India
- Copy of Overseas Citizen of India card issued by Government of India
- Copy of other national or citizenship identification number or taxpayer identification number duly apostiled by the Indian embassy, high commission, or consulate in the country where the applicant is located
- Copy of bank account statement in the country of residence
- Driving license
- Copy of registration certificate issued by the foreigner’s registration office showing an Indian address
- Copy of visa granted and a copy of the appointment letter or contract from the Indian company, and the original certificate of Indian address issued by the employer
Documents Required for PAN Application – Corporates
- Copy of Certificate of Registration incorporated in India
Specific requirements for foreign-invested corporations
- Copy of Certificate of Registration issued in the country where the applicant is located, duly apostiled by the Indian embassy in the country where the applicant is located
- Copy of the registration certificate issued in India or of approval granted to set up an office in India by the Indian authorities
Upon submission for all above documents, the PAN is allotted within six to eight weeks.
Significance of PAN
Apart from the above-mentioned factors, importers, exporters and those intending to get themselves registered as manufacturers, traders or service providers in India are required to obtain a PAN.
Meeting the following criteria makes PAN registration mandatory as of January 1, 2017:
- If your income exceeds the basic exemption limit of US$2,937 (Rs 200,000)
- Sale or purchase of immovable property valued at US$14,685 (Rs 10,00,000) or more, the PAN should be disclosed in the document pertaining to the purchase or sale of the property
- Sale or purchase of a motor vehicle requiring registration other than two-wheelers
- Cash payment of US$735 (Rs 50,000) or more per day for the purchase of bank drafts, pay orders or bankers’ checks during any one day
- Cash payment exceeding US$735 at a time in connection with travel to any foreign country (fare or purchase of foreign currency)
- Payment to hotels and restaurants against bills exceeding US$735 at any one time
- Opening a bank account
- Application for issuance of a credit card
- Cash deposits of US$735 or more with any bank during any one day
- Payment of US$735 or more to a mutual fund for purchase of units, or to a company for acquiring its shares, or to a company/institution for acquiring its debentures/bonds, or to the RBI for acquiring bonds.
- Life insurance premiums exceeding US$735 a year.
- Purchase/sale of any goods or services (including jewelry) exceeding US$2,937 per transaction.
The above developments come as the government looks to tighten sources of black money and widen the tax base. While obtaining a PAN is optional the aforementioned criteria make it almost impossible to do without a PAN and is strongly recommended even for foreign nationals. Most companies require employees to provide PAN number for tax purposes. For those that do not provide PAN, they can be subject to higher tax rates. It is therefore imperative to get a PAN while working in India.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
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