The Income Tax Department has released a notification specifying some new rules for PAN (permanent account number) card applicants and for those without PAN. The new PAN card rules will become effective from 5th December 2018.

The new notification specifies that financial entities which make transactions amounting to Rs. 2.5 lakh or more in a financial year will have to apply for a PAN card. A person other than an individual, who enters into a financial transaction of an amount of Rs. 2.50 lakh or more in a financial year, also needs to apply for a PAN card on or before the May 31, 2019, specifies the CBDT notification.

The Income Tax Department has already announced changes in the application form of PAN card.

Here are few salient things to know about new PAN card rules:

1. Persons covered
In case a managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer (or any such person who does not have PAN), he/she will also be required to apply for PAN on or before May 31 of the following financial year, i.e. 31/05/2019 as per the notification.

2. Upper limit for sales/turnover/gross receipts specified
With the new rules, resident entities will have to obtain PAN card even if the total sales, turnover or gross receipts are not likely to exceed Rs. 5 lakh in a financial year. Suraj Nangia, Partner, Nangia Advisors LLP, quoted “This will help the income tax department track financial transactions, broaden its tax base and prevent tax evasion”.

3. Father’s name not mandatory in certain cases
Thee Income Tax Department also announced certain changes to the application form 49A for PAN. It amended the income tax rules and said that quoting of father’s name in PAN application forms would not be mandatory in certain cases. If a PAN applicant’s father is deceased or separated, he or she can chose not to mention father’s name at all in the form.

4. Father’s name not at all needed for person whose mother is single parent.
The amended rules provide that furnishing of father’s name will not be mandatory for a person whose mother is a single parent. This clause takes into account the societal changes.

5. PAN is an identification number for financial transactions
PAN is an identification number assigned to income tax assessees of the country. It is required for financial transactions such as opening of a bank account and filing of income tax returns (ITR).

The department has not only taken a broader view by allowing persons to skip quoting their father’s name but also removed ambiguity for those with single parent. Above all the other things, this will enable it to expanded its tax base by covering more and more entities and individuals who have been evading applying for PAN by taking advantage of loopholes in the rules.