To prevent tax evasion and allow more flexibility to taxpayers, the Income Tax department has changed PAN card rules with effect from today. Last month, the Central Board of Direct Taxes (CBDT) had issued a notification announcing that the Income Tax Rules, 1962, has been amended with effect from December 5.
All you need to know about changes in PAN card rules:
1. It will be compulsory for all entities doing financial transactions of more than Rs 2.5 lakh to get a Permanent Account Number from December 5. This is seen as a step towards preventing tax evasion in smaller business entities.
2. The rule may apply to individual taxpayers also but only if they are associated with such entities in the capacity of a managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office-bearer or any person competent to act on behalf of the entity. In case such individuals do not have PAN, they are supposed to get one within 31st May of the next financial year.
3. Tax experts say so far resident entities were asked to obtain PAN even if the total sales or turnover or gross receipts are not or are not likely to exceed Rs 5 lakh in a financial year. The new rule is meant to help the income tax department track financial transactions, broaden the tax base and prevent tax evasion.
4. The other important amendment in the rule is meant for those whose mother is a single parent. Such PAN card applicants will no longer be asked to furnish father’s name. Till now, mentioning father’s name is mandatory in PAN card applications. Applicants, however, had the freedom to choose whose name they want printed on the PAN card — father’s or mother’s.
5. The second amendment is meant to address the concerns of those PAN card applicants whose fathers are either estranged or dead.