Permanent Account Number (PAN):
A Permanent Account Number is a 10-character alpha-numeric identifier. It is issued by the Income Tax Department to all judicial entities identified under the Indian Income Tax Act, 1961. The primary purpose of PAN is to identify all financial transactions of an individual or company and prevent the evasion of taxes. PAN also acts as an important proof of identification.
A Permanent Account Number or PAN, as it is commonly known, is not just for individuals but for companies as well. PAN is for all taxpayers living in the country, be it an individual, a partnership or a company. Furthermore, it also acts as an identity proof.
For you to get the unique 10-character PAN, you need certain documents and identifications. In this article, we address a few things that you should know if you want to get a PAN for your company.
Which companies require a PAN card?
Any individual or corporate involved in business in India requires a PAN card. Be it an Indian company or a foreign company, you need to get registered and have a PAN card.
Also, if your company is generating money from outside India but was registered in India or has a permanent establishment or even a simple office in India, you need a PAN card.
If you come under any of the following entities, then you should be having a PAN card to deal in any kind of business.
- Partnership firm
- Association of persons
- Limited Liability Partnership (LLP)
- Body of Individuals
- Limited company
- Private firm
- Foreign institutional investor
- Hedge fund
Why should your company have a PAN Card?
Your company’s PAN card is of huge significance as every transaction will go through this number. It also helps in identifying the tax flow of your company. Additionally, even if you are not eligible to pay tax under income tax benefits given to startups, you still need a PAN card if you are earning money.
The following are the reasons why your company needs it:
- For any tax-related transactions and documentations, you need to quote your PAN. By giving this number, the Income Tax Department can track your transactions. It is important that you have this so that no trouble comes your way
- If you are a foreign company, you need to have a PAN to operate in India. Otherwise, the government can charge you the highest possible tax rates
- The PAN helps you in the payment of your invoices without deduction, filing of tax returns, remittances and much more
- If you need a TRN (Tax Registration Number), a PAN is a must
- According to the amendments made under Section 206AA in 2009, every foreign company must have their own PAN to continue with any business with a company in India or inside the country. All kinds of entities are included in this
- The Indian government has the right to charge you 30% or more of your invoiced payments in case you do not have a PAN
How to apply for a PAN?
You can apply for a PAN card through the online route through the NSDL website or do it via the offline method.
The online method
- You need to visit the NSDL website and fill the Form 49A from the drop down menu
- For the option of â€˜Application Type’, fill the form listed under â€˜Firm’. Fill in all the details like company name, date of application and so on
- Post this, you need to fill in the income details and company registration number. You also need to fill in the communication address
- Fill in the Assessing Officer code (AO Code). If you do not know it, you can find it in the AO Code Search Panel in the NSDL website
- You need to upload copies of the required documents and pay the said fees. Certificate of Incorporation and Address proof are the two most important copies of information
- Upon following all the steps, you will get an acknowledgement number through which you can track the details of progress regarding your PAN Card
- You then need to send a signed acknowledgement form to the NSDL head office within 15 days
The offline method
- You first need to download the Form 49A from the NSDL website and then print it
- Fill the form as per the requirements and attach all the necessary documents
- You need to submit the form and documents to the nearest NSDL centre. If you do not know a centre near you, you may find it on the website
- The centre will issue a letter of acknowledgement as a proof to the fact that you have submitted your details and documents
- Upon thorough verification of your details, you will receive the PAN card at the mentioned company address. The cost of this whole procedure costs you just 100/-
For an Indian company
- An identity or address proof
- A copy of the Certificate of Incorporation
- A copy of a No Objection Certificate issued by MCA (Ministry of Corporate Affairs)
For a foreign company
- A copy of the registration certificate issued by Indian officials to setup an office in India
- A copy of the certificate of registration from the applicant’s native country, duly attested by â€˜Apostille’ or by the Indian Embassy or High Commission or even by authorised officials of overseas branches of scheduled banks registered in India
Furthermore, you need a bank draft that will be used to pay the issuance fee to the Tax Department to get a PAN card. Make sure that the payment is done in INR. You can also draw a foreign currency draft in favour of NSDL.
If your ID proofs and company-related documents are all correct, the whole process does not even take a month. You can easily acquire the PAN card for your company and indulge in business in a smooth manner.