The Income Tax Department on Wednesday changed the permanent account number (PAN) criterion for businesses with effect from December 5, 2018, thereby making it compulsory for all business entities with a turnover worth more than Rs 2.5 lakh in a financial year to have a PAN.
A new circular issued by the Central Board of Direct Taxes, the apex body of the Income Tax (IT) department all non-individual businesses must apply for PAN on or before May 31 of the financial year next to the one in which they have done financial transactions of at least Rs 2.5 lakh.
Earlier the businesses required to apply for the PAN only if their turnover crossed Rs 5 lakh during the financial year, an I-T department notification stated.
Even as the new norm excludes individual taxpayers, managing director, director, partner, trustee, author, founder, Karta, chief executive officer or office-bearer and other such individuals of shell companies also need to apply for a PAN card, in case they don’t have one within the stipulated time.
Sources said the new rule will help income tax department track financial transactions, broaden the tax base and prevent tax evasion.
In another important development, the I-T department has ruled that quoting of father’s name in PAN application forms will not be compulsory in cases where mother of the applicant is a single parent (applicant’s father is deceased or separated. The new rule will also come into effect from December 5.