PAN should be quoted in all the documents related to income tax like income tax return, income tax Challan, correspondence, documents related to income tax. PAN is very important number/card/document for assessee as it is an identity of the person in the eyes of the income tax department.
Persons who need or apply PAN mandatory
- Having taxable income
- charitable trust
- Person receiving Income and liable for TDS
- exporters and Importers
- Persons registered under Value Added Tax Act, Central Sales Tax Act, Central Excise Act, Service Tax Act
PAN is mandatory for TDS
If any TDS has been deducted by the payer, then it is the duty of the payee to furnish PAN to the payer. Otherwise it will not credit to payee account and there will be difficulty while getting a refund back from Income Tax Departments. This is one of the reasons for delay of income tax refunds.
Now sec 206AA (w.e.f. 1st April, 2010) has inserted that if a payee does not furnish his PAN to the payer while deducting TDS, then it is the duty of the payer to deduct 20% TDS, whether actual TDS is less than that. The reason to insert this provision is mandatory to furnish of PAN.
If the TDS rates is higher than 20% then higher rate will be applicable
Furthermore, if anybody wants to give a declaration in the form 15H or 15G for non-deduction of TDS, then he will also furnish his PAN. Otherwise it will be treated as invalid and TDS will be deducted @ 20% or applicable rate, whichever is higher.
Same in the case of Tax Collection at Source as buyers/lessee will furnish their PAN to the person who is liable for collecting TCS.
PAN is mandatory in TDS Returns
Persons who are responsible to deduct TDS, Payer/Deductor will quote payee’s PAN in the TDS certificate, TDS Returns, correspondence.
Same in the case of TCS, It should be quoted in all the TCS statements.
PAN is mandatory in the case of Minor
Minor also need PAN if they want to open a bank account in any bank or time deposit more than Rs. 50,000/-. There is an option to furnish PAN of the parents.
Penalty on failure to apply or quoted PAN
As Permanent Account Number is required to quote on various documents and transaction So Income Tax Act has one section, which tells about penalty on failure to apply PAN. According to section 272B, there is a penalty of Rs. 10,000 on failure to apply or quote PAN.
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