Legal Framework: Section 139A of the Income Tax Act
The legal basis for PAN is Section 139A of the Income Tax Act, 1961, which mandates that every person whose total income exceeds the maximum amount not chargeable to tax, or every person carrying on a business or profession with total turnover exceeding Rs 5 lakh in any previous year, must obtain a PAN. The Central Board of Direct Taxes (CBDT) prescribes the form and procedure for PAN allotment through Rule 114 of the Income Tax Rules, 1962.
PAN is allotted in the form of a laminated card by the Income Tax Department, through authorised service providers such as NSDL (now Protean) and UTIITSL. The card contains the holder's name, father's name, date of birth, photograph, signature, and the PAN number. Each PAN is unique and remains valid for the lifetime of the holder. In Asansol, PAN applications can be submitted online through the NSDL or UTIITSL portals, or through PAN facilitation centres located in the city.
Section 139A also mandates that every person who is required to obtain a PAN must quote it in all documents pertaining to financial transactions prescribed under Rule 114B. Failure to quote PAN where mandatory attracts a penalty under Section 272B of the Income Tax Act, which can be up to Rs 10,000 for each default.
Mandatory Transactions Requiring PAN in Asansol
Rule 114B of the Income Tax Rules prescribes a comprehensive list of transactions where quoting PAN is mandatory. These include sale or purchase of immovable property valued at Rs 5 lakh or more, sale or purchase of a motor vehicle other than a two-wheeler, opening a bank account (other than a basic savings account), applying for a credit card, and opening a demat account. In Asansol, property registration at the Sub-Registrar office requires PAN of both buyer and seller for transactions above the threshold.
PAN is also mandatory for time deposits exceeding Rs 50,000 with a bank, payments exceeding Rs 50,000 for travel to a foreign country, payment exceeding Rs 50,000 to a mutual fund for purchase of units, and payment exceeding Rs 50,000 to a company for acquiring shares. For businesses in Asansol, PAN is required for GST registration, obtaining a trade license, and filing professional tax returns.
Cash deposits exceeding Rs 50,000 in a single day require PAN, as do cash payments exceeding Rs 2 lakh in a single transaction under Section 269ST of the Income Tax Act. Wire transfers and demand drafts exceeding Rs 50,000 also require PAN. Asansol residents must ensure they quote PAN in all prescribed transactions to avoid penalties and ensure smooth processing of their financial transactions.
PAN for Income Tax Filing and Compliance
PAN is the primary identifier for income tax compliance in India. Every person who is required to file an income tax return under Section 139 of the Income Tax Act must have a PAN and quote it in the return. In Asansol, individuals and businesses file their income tax returns online through the Income Tax Department portal, using their PAN as the login identifier. The PAN links all tax payments, TDS credits, and return filings to the taxpayer's record.
Tax Deducted at Source (TDS) is linked to the PAN of the deductee. If the deductee does not provide a PAN, TDS is deducted at a higher rate of 20% under Section 206AA of the Income Tax Act, instead of the normal rate. This makes PAN essential for Asansol residents receiving salary, interest, rent, or professional fees, as without a PAN, they lose a significant portion of their income to higher TDS.
PAN is also used for tracking high-value transactions through the Annual Information Return (AIR) and Statement of Financial Transactions (SFT). Banks, property registrars, and other institutions in Asansol report high-value transactions linked to PAN to the Income Tax Department, enabling the department to detect tax evasion and mismatch between income and spending. Asansol taxpayers should ensure their PAN is correctly quoted in all transactions to maintain proper tax records.
PAN for Business Registration in Asansol
For businesses in Asansol, PAN is a prerequisite for various registrations. Proprietorships use the proprietor's individual PAN for all business transactions. Partnerships, LLPs, companies, and HUFs must obtain separate PAN cards in the name of the entity. The PAN application for a business entity requires incorporation documents, partnership deed, or HUF deed as supporting evidence, along with the Karta's or partner's identity proof.
GST registration in Asansol requires the PAN of the business entity. The GSTIN (GST Identification Number) is linked to the PAN, and one PAN can have multiple GSTINs for different states. MSME/Udyam registration also requires PAN, as the registration is linked to the income tax records of the business. PAN is also required for obtaining an Import-Export Code (IEC) from the DGFT for businesses engaged in international trade.
For startups and companies registered in Asansol, PAN is required for opening corporate bank accounts, filing ROC returns, and obtaining various licenses and permits. The Companies Act, 2013, requires every company to obtain a PAN within 30 days of incorporation. Failure to obtain PAN can result in penalties and inability to conduct business transactions. Asansol entrepreneurs should obtain PAN promptly after incorporation to ensure compliance.
Penalties for Not Having or Quoting PAN
Under Section 272B of the Income Tax Act, 1961, failure to obtain a PAN or failure to quote it in a transaction where it is mandatory attracts a penalty of Rs 10,000 per default. The Assessing Officer may impose this penalty after giving the defaulter an opportunity to be heard. In serious cases of deliberate non-compliance, the penalty may be higher, and the person may also face prosecution under Section 276B of the Act.
Quoting a false or incorrect PAN is a serious offence. Under Section 272B, quoting a PAN that belongs to another person or a fictitious PAN attracts the same penalty of Rs 10,000. Additionally, the person who allowed the use of their PAN may also face penalties. Using a false PAN can also lead to investigation for tax evasion and money laundering under the Prevention of Money Laundering Act, 2002.
Asansol residents and businesses should ensure they have a valid PAN and quote it correctly in all prescribed transactions. If a PAN is lost or damaged, a duplicate can be obtained through the NSDL or UTIITSL portal. Changes in name, address, or other details can be made through the PAN correction form. Maintaining accurate PAN records ensures compliance with tax laws and avoids penalties and legal complications.
Aadhaar-PAN Linking and Recent Changes
Section 139AA of the Income Tax Act, inserted by the Finance Act, 2017, mandates that every person who is eligible to obtain an Aadhaar card must link their PAN with Aadhaar. Failure to link Aadhaar with PAN by the prescribed deadline renders the PAN inoperative, meaning it cannot be used for filing income tax returns, and TDS will be deducted at the higher rate of 20%. The linking can be done online through the Income Tax Department portal or the NSDL portal.
In Asansol, many residents have faced issues with Aadhaar-PAN linking due to name or date of birth mismatches between the two documents. In such cases, the details in either Aadhaar or PAN must be corrected before linking. The linking process is simple if the details match, and can be completed in a few minutes online. The government has extended the deadline multiple times, but eventually, unlinked PANs become inoperative.
Recent amendments have also introduced the concept of an "inactive" PAN. A PAN that is not linked with Aadhaar after the deadline becomes inoperative, but it is not cancelled. The PAN can be reactivated by linking it with Aadhaar, subject to a late fee of up to Rs 1,000 under Section 234A of the Income Tax Act. Asansol residents should ensure timely linking to avoid disruption of their financial transactions and tax compliance.
Frequently Asked Questions
Is PAN mandatory for buying property in Asansol?
Yes, under Rule 114B of the Income Tax Rules, PAN of both buyer and seller is mandatory for sale or purchase of immovable property valued at Rs 5 lakh or more. The Asansol Sub-Registrar requires PAN for registration of property documents above this threshold. Failure to quote PAN can attract a penalty of Rs 10,000 under Section 272B.
What happens if I do not link Aadhaar with PAN?
Under Section 139AA of the Income Tax Act, if you do not link your Aadhaar with PAN by the prescribed deadline, your PAN becomes inoperative. You cannot file income tax returns with an inoperative PAN, and TDS will be deducted at 20%. You can reactivate your PAN by linking it with Aadhaar, subject to a late fee of up to Rs 1,000.
Can a business operate without a PAN in Asansol?
No, businesses cannot operate without a PAN. PAN is required for GST registration, opening a bank account, filing tax returns, obtaining licenses, and conducting prescribed financial transactions. A proprietorship can use the proprietor's individual PAN, but partnerships, companies, and HUFs need separate PANs. Failure to obtain a PAN attracts a penalty of Rs 10,000 under Section 272B.
What is the penalty for quoting a wrong PAN?
Quoting a false or incorrect PAN attracts a penalty of Rs 10,000 per default under Section 272B of the Income Tax Act. If the wrong PAN belongs to another person, both the person who quoted it and the person who allowed use of their PAN can be penalised. Using a fictitious PAN can also lead to investigation for tax evasion.
How long does it take to get a PAN card in Asansol?
A PAN card is typically issued within 15 to 20 working days from the date of application. Online applications through NSDL or UTIITSL are processed faster, and the e-PAN (digital version) may be available within 5 to 7 days. The physical card is dispatched by post to the address mentioned in the application. Asansol residents can track the status online.