Finance

ICAI UDIN Generation Process: Unique Document Identification Number of UDIN is a unique number generated for every document that has been attested by a Chartered Accountant. To generate the UDIN, chartered accountants need to register themselves on the UDIN portal.

The need for a unique identification number was observed after a lot of cases where third persons misrepresenting themselves as CA members were misleading the authorities and the stakeholders. Also, signatures were being forged by non-CAs. The attestation or signature on financial documents or certificates made by the Chartered accountants, is what proves that the financial statements reflect their true nature. Stakeholders and investors also rely upon these documents.

To curb these malpractices, the Institute of Chartered Accountants of India or ICAI made the UDIN mandatory for all certificates from 1st February 2019. Chartered accountants with a  full-time certificate of practice (COP) can register on the portal and register the certificates attested/signed by them.

The UDIN is an 18 digit unique number that is generated for each document that is registered on the UDIN portal. The format of UDIN is:

• The first two digits represent the last two digits of the current year (21 in this case).
• The next six digits are the Membership Registration Number of the CA.
• The next ten digits are random alpha-numeric generated by the portal.

Table of Content

• How to Register on the Portal?
• How to Generate UDIN?
• In Case Of Certificates
• In Case Of GST And Tax Audit
• In Case Of Audit And Assurance Functions

How to Register on the Portal?

To generate the UDIN, CAs with COP need to register on the UDIN portal. Follow these steps to register yourself on the portal:

1. Visit the official website at https://udin.icai.org/.
2. Click on First-time sign-up and enter your details such as membership number, date of birth and date of enrolment.
3. Click on “Send OTP”.
4. You will receive the OPT on your registered mobile number and email address.
5. Click on “Continue”. You will then receive your login credentials on the email address registered with the ICAI.
6. Log in using your credentials.

How to Generate UDIN?

To generate the UDIN number, follow the steps given below:

1. Go to the official ICAI UDIN website at https://udin.icai.org/.
2. Login using your six digits membership number and password.
3. Click on Generate UDIN.
4. Select the “Document type” for which you wish to generate UDIN.
   1. Certificates
   2. GST and tax Audit
   3. Audit and Assurance Functions

In Case Of Certificates

Select the type of certificate from the options:

1. Additional certification by concurrent auditors ( not forming part of concurrent audit assignment).
2. Capital contribution/Net worth certificate
3. Certificate issued by Statutory Auditors of  Banks
4. Certificate issued by Statutory Auditors of Insurance Companies
5. For bank KYC purposes confirming sole proprietorship.
6. Certificate issued under RERA.
7. Certificate of Liquid Asset U/S 45- IB of RBI Act, 1945.
8. Certificate for physical verification of securities issued by Concurrent Auditors of Treasury Department of Banks.
9. Certificate for Short Sale of securities issued by Concurrent Auditors of Treasury Department of Banks.
10. Certificate regarding Sources of Income.
11. Certificates for claiming deductions and exemptions.
12. Certificates for utilisation of Funds/ Grants by Charitable Trust/Institution.
13. Certificates for utilisation of Funds/ Grants by NGOs
14. Certificates for utilisation of Funds/ Grants by statutory authority.
15. Certificates for utilisation of Funds/ Grants under FERA, FEMA, or Other Laws.
16. Certificates in form 15CB.
17. Certificates in relation to initial Public Issues/compliances under ICDR and LODR.
18. Certificates issued under statutory records under Companies Act, 2013.
19. Certificates issued under LLP Act.
20. Certificates for a Refund claim under GST.
21. Certificates for a Refund claim under Indirect taxes.
22. Certificates for arms-length price U/S 92 of the Income Tax Act, 1961.
23. Certificates for fair values of shares of a Company for the purpose of buyback.
24. Certificates for fair values of shares of a Company for the purpose of merger/de-merger.
25. Certificates for fair values of shares of a Company for the purpose of transfer of shares.
26. Certificates for fair values of shares of a Company for the purpose of allotment of shares.
27. Certification under exchange control legislation.
28. Certificate for deductions under Income tax laws.
29. Certificates of net worth certificates for Banks finances, bank guarantee, student study loan or visa by a foreign embassy.
30. Certificate for RBI statutory auditor for NBFCs.
31. Turnover certificate.
32. Working capital certificate/ networking capital certificate.[Other certificates.

In Case Of GST And Tax Audit

Select the relevant option under “Particulars of section/form under which report issued” and provide under financial figures.

Section 44AB of IT Act, 1961

1. Total turnover, Net profit/turnover and WDV of fixed assets as per 3CD.
2. Assessment year.
3. Firm Registration number.

Other tax audit reports other than Section 44AB of IT Act, 1961

1. Assessment year.
2. Firm Registration number
3. Any figure/value from the report.

Under Section 35(5) of CGST Act,2017

1. Assessment year.
2. Firm Registration number
3. Turnover as per Audited financial statements and as declared in Annual Returns.

Under Section 66(1) of CGST Act,2017

1. Short payment of tax and any other amount under form ADT-04.
2. Assessment year.
3. Firm Registration number

In Case Of Audit And Assurance Functions

Select the “type of audit” and “under act/law/statutory” regulation.

Type of Audit

1. Statutory audit for corporate.
2. Statutory audit for non-corporate.
3. Statutory audit for a branch.
4. Independent financial audit.
5. Forensic audit.
6. Concurrent audit.
7. Internal audit.
8. Energy audit.
9. Propriety audit.
10. Income/receipt and payment/expenditure audit.
11. Environment audit
12. Information system audit.

Under act/law/statutory

1. Companies Act, 2013.
2. Companies Act, 1956.
3. Banking Regulation Act, 1949.
4. Limited Liability Partnership Act, 2008.
5. Insurance Act, 1938.
6. SEBI Act, 1992.
7. Societies Regulation Act, 1860.
8. Enter the relevant date under the “Date of signing of report” option.
9. Provide the relevant information under “Documents description”.
10. Click on “Send OTP”.
11. Enter the OTP received on the registered mobile number and then click on the Submit button.
12. The system will generate your 18-digits UDIN.

Corporate Social Responsibility (CSR): Corporate Social Responsibility (CSR) is defined as an organisation’s sense of responsibility towards both the environment and the community in which it operates.

Organisations fulfill this responsibility through the processes of waste and pollution reduction, by venturing activities of educational and social programs, contributions to the academic and social programs, and by being environmentally friendly.

Corporate Social Responsibility is not charity or mere donations; instead,  it is a concept whereby the companies or organisations integrate social concerns in their business operations and visibly contribute to the social good to better their stakeholders and society voluntarily.

These organisations do not limit themselves to using resources to engage in activities that increase only profits; instead, they use CSR to integrate social, economic, and environmental objectives and operations and growth.

Corporate Social Responsibility is often stated to increase an organisation’s brand reputation in society and its customer base.

Section 135 of the Companies Act, 2013, Companies (Corporate Social Responsibility) Rules, 2014, and Schedule VII prescribes mandatory provisions for organisations to accomplish their Corporate Social Responsibility.

The article aims to analyse these provisions relating to The Companies Act, 2013 and the amendments.

• Corporate Social Responsibility (CSR) Committee
• Functions Of Corporate Social Responsibility (CSR) Committee
• Responsibility Of Board Of Directors
• Corporate Social Responsibility (CSR) Policy 
• Corporate Social Responsibility (CSR) Activities 
• Schedule 7

Corporate Social Responsibility (CSR) Committee

Every Organisation on which Corporate Social Responsibility is applicable must comprise a CSR Committee of the Board where it boards three or more directors. At least one shall be an independent director.

However, if an organisation sees no need to appoint an independent director, then it comprises two or more directors in the Committee.

Two directors are considered in a private company comprising only two directors on its Board Committee.

Two directors are considered in a foreign organisation, of which one person shall be nominated as the authorised person resident in India and the other appointed by the foreign company.

Functions Of Corporate Social Responsibility (CSR) Committee

The Corporate Social Responsibility Committee shall perform the following functions-

1. The primary function of the CSR is to formulate and recommend to the CSR Committee a CSR Policy, which indicates the list of activities to be undertaken by the Organisation.
2. The CSR Committee must recommend the total expenditure amount to be incurred on the activities referred to in clause (i)
3. The Committee must monitor the CSR Policy of the company on a timely basis.
4. The CSR Board must institute a transparent monitoring mechanism for all the company’s programs, activities, or project implementations.

Responsibility Of Board Of Directors

The board of directors of every socially responsible company is responsible for-

• Consideration of recommendations enforced by CSR Committee; approval of the CSR policies enlisted for the company; and the disclosure of the contents of such policy in the board report
• The BoD is responsible for ensuring that the activities included in the CSR Company Policy undertaken by the Organisation.
• Disclosing the CSR Committee composition in the board report
• Responsible for ensuring that the company spends at least 2% of the average net profits during its financial year made during the three immediately preceding financial years, in pursuance of the Organisation’s CSR Policy. The CSR projects or activities or programs undertaken in India shall amount to the overall CSR Expenditure.

Corporate Social Responsibility (CSR) Policy

A company’s CSR Policy shall, inter-alia, comprising the following-

• A list of the activities or projects, or programs which a company schemes to undertake specifying the modalities of execution of the listed projects or programs and the implementation schedules for the same
• The monitoring process of the enlisted activities, projects or programs
• A clause under the policy highlighting that the surplus emerging from the CSR projects or programs or activities shall not be included in the company’s annual business profit.

Corporate Social Responsibility (CSR) Activities

• As per the CSR Policy, the Corporate social responsibility activities needs to be undertaken by the company, excluding activities undertaken in pursuance of its ordinary course of business
• As approved by the CSR Committee, the board of directors may decide to undertake its CSR activities-
  1. A  registered trust or a section VIII company or any registered society, set up by the organisation, either along with another company or single-handedly
  2. A  registered trust or a section VIII company or a registered society, established by either the State Government or the Central Government or any entity established that falls under the Act of Parliament or a State legislature
  3. A  registered trust or a section VIII company or a registered society, other than fall under the clauses (a) and (b) mentioned above; must hold an established track record of three years in ventures of such similar programs or projects
• collaboration with other companies-
  1. for undertaking any CSR projects, programs, or activities in a manner that the CSR Committees of the respective companies are in a position to report separately on such projects or programs
• The CSR projects or programs or activities to be different from the CSR Activities:
• The expenses met should be for the benefit of the company employees and their families alone
• Direct or indirect contribution of any amount to any political party

Schedule 7

The list of activities which may be included by companies in their Corporate Social Responsibility Policies relating are as follows:

1. Active partake of livelihood enhancement projects and the promotion of education, including employment enhancing vocational skills, special education, especially among elderly, women, children, and the differently-abled.
2. Eradication of poverty, hunger, and malnutrition; promotion of healthcare facilities including preventive health care and sanitation measures inclusive of the Swachh Bharat Kosh contributions set up by the Central Government to promote sanitation and the availability of safe and clean drinking water.
3. Protection of national art, heritage, and culture including undertaking projects like the restoration of buildings and sites of historical importance and works of art; emplacing public libraries and the development and promotion of traditional art and handicrafts
4. Undertaking beneficial measures for war widows, armed force veterans, and their dependents
5. Slum Area Development
6. Projects regarding Rural development
7. Contributions or funds furnished to technology incubators located within academic institutions and approved by the Central Government
8. Ensuring activities towards environmental sustainability and protection of fauna and flora.

Permanent Account Number (PAN): PAN is an electronic system of identification through which all tax-related information for an individual/company is recorded against a single specific PAN number. This acts as the principal key for the storage of information and is distributed and administered across the country. Hence no two tax-paying entities in India can have the same PAN.

A PAN, which basically stands for Permanent Account Number, is a means of identifying multiple taxpayers in the country. PAN is a unique identification 10-digit alphanumeric number (containing both numbers and alphabets) assigned to Indians, mainly to those people who pay tax.

The PAN is simply a system of identification is based on a computer system that assigns a unique identification number to every tax-paying entity in India. All tax-related information for a person is recorded through this program against a single and unique PAN number which acts as the principal key for the storage of information. This is administered across the country, and hence no two individuals on tax paying entities can have the same PAN in India.

PAN Card is given at the time of allotment made to an entity by the Income Tax Department. While PAN is just an alphanumeric number, PAN Card is a physical card that has an individual’s name, date of birth (DoB),

as well as photographs. As proof of DoB or identity, copies of this card can be submitted.

Every individual’s PAN Card is unaffected by any change in address, so it is basically valid for a lifetime.

• Overview of PAN or PAN Card
• Eligibility for PAN
• Types of PAN
• Documents Required for PAN
• Important Questions Regarding PAN

Overview of PAN or PAN Card

1. Name Of Authority issuing PAN– Income Tax Department, Govt. of India
2. PAN Customer Care Number– 020 – 27218080
3. The inception of PAN Card– 1972
4. Validity Of PAN Card– Life Time
5. Cost of PAN Card– Rs. 110
6. Number Of Enrollments- 25 crores (approximate)

Eligibility for PAN

PAN Card is allotted to individuals, non-resident Indians, companies, or any entities that pay taxes in India.

Types of PAN

• Individual
• HUF-Hindu undivided family
• Company
• Firms/Partnerships
• Foreigners
• Trusts
• Society

Documents Required for PAN

Two types of documents are asked in PAN. Proof of Identity (POI) and Proof of address (POA). Either of the following two documents should meet the criteria.

Individual Applicant– POA/POI – Voter ID, Aadhaar, Driving Licence, Passport

1. Hindu Undivided Family– An affidavit of the HUF along with POI/POA details declared by the head of HUF
2. Company registered in India– Certificate of Registration published by Registrar of Companies
3. Firms/ Partnership (LLP) -Certificate of Registration published by the Registrar of Firms/ Partnership Deed and Limited Liability Partnerships.
4. Trust -A copy of the Certificate of Registration Number or Copy of Trust Deed declared by a Charity Commissioner.
5. Society -Certificate of Registration Number from Registrar of Charity Commissioner or Co-operative Society
6. Foreigners – Passport OCI /PIO card published by the Indian Government Bank statement of the residential country and Copy of NRE bank statement in India

Important Questions Regarding PAN

What is PAN?

PAN is the stands for Permanent Account Number. PAN is basically a unique alphanumeric ten-digit number issued by the Income Tax Department. PAN is most commonly issued in the form of a laminated plastic card (commonly known as a PAN card). Given below is a sample number of PAN: ALWPG5809L

What is the utility of PAN?

In order to link all transactions of the assessee with it, the department gets through PAN. These transactions include tax payments, TCS/TDS credits, specified transactions to a particular organization, returns of income, correspondence, etc. It helps easy retrieval of information of assessee and matching of various borrowings, investments and other activities of the assessee made for business.​

What are the Advantages of Getting a Permanent Account Number [PAN] and PAN Card?

​A Pan or Permanent Account Number Card has been made mandatory for every transaction with the Income-tax Department. It is also compulsory for numerous other financial transactions such as the opening of bank accounts, a deposit of cash in a bank account, opening of Demat account, dealing in securities, in the bank account, transaction of immovable properties, etc. A PAN card is a relevant median of photo identification accepted by all Government as well as non-Government organizations in the country.​

How PAN Gets Its Unique Identity, And How It Is Formed?

PAN is a unique alphanumeric ten-digit number published by the Income Tax Department.

The structure of PAN is presented below:

1. Out of the first five characters mentioned in the card, the first three characters represent the alphabetic series covering from AAA to ZZZ. (E.g. ALWPG5809L).
2. The status of the PAN holder is represented by the fourth character of PAN represents (E.g. ALWPG5809L).
   • “A” – represents Association of Persons (AoP)
   • “B” – represents Body of Individuals (BOI)
   • “C” – represents Company
   • “F” – represents Firm/Limited Liability Partnership
   • “G” – represents Government Agency
   • “H” – represents Hindu Undivided Family (HUF)
   • “J” – represents Artificial Juridical Person
   • “L” – represents Local Authority
   • “P” – represents Individual
   • “T” – represents Trust
3. The fifth character of PAN describes the first character of the PAN holder’s surname/last name in the case of a person. In the matter of non-individual PAN holders, the fifth character designs the first character of the PAN holder’s name (E.g. ALWPG5809L)
4. The following four characters are sequential numbers running from 0001 to 9999 (E.g. ALWPG5809L).
5. The last character, which is the tenth character, is an alphabetic check digit (E.g. ALWPG5809L).

The combination of all the above items provides the PAN with its unique identity.

Who Has To Take Pan?

​​​​​​​PAN is to be taken by the following individuals:

• Every individual whose total income or the total income of any other individual in respect of which the person is assessable during the previous year surpasses the maximum amount which is not chargeable to tax.
• A charitable trust who is expected to furnish a return under Section 1​39(4A)
• Every individual who is carrying on any business or profession whose gross receipts, total sale, or turnover is or is likely to surpass five lakh rupees in any previous year.
• Every individual who intends to enter into specified financial transactions in which quoting of PAN is mandatory.

Every non-individual resident individual and individual associated with them if the financial transaction entered into by such non-individual resident individuals during a financial year exceeds Rs. 2,50,000.

Note: Individuals associated with non-individual resident persons indicates the director, managing director, partner, trustee, author, founder, Karta, chief executive officer, office bearer or principal officer of the non-individual resident persons or any individual competent to act on behalf of such persons.

An individual not incorporated in any of the before-mentioned can voluntarily appeal for PAN.

How to Apply for PAN?

PAN application can be filled up by an individual in the following forms –

1. for Indian Citizens- Form 49A
2. for Foreign CitizensForm 49AA

PAN application can be filled and applied either online through the website of (www.tin-nsdl.com) or the website of UTIITSL ​or through any of the NSDL TIN-PAN Centres/ Facilitation Centres.

While submitting the application form of PAN, the applicant will have to indicate whether an E-PAN card or physical PAN card is required.

The physical PAN card must be printed & dispatched at the communication address if an applicant opts for a physical PAN Card.

In case a physical PAN Card is not required, then an email ID will be necessary & an e-PAN Card in the format of PDF will be sent at the provided email ID mentioned in the PAN application form of the PAN applicant. In such cases, a physical PAN Card will not be dispatched.

If an applicant is associated with a company that has not been registered under the Companies Act, 2013, then under sub-section (1) of section 7, Form No. SPICE-INC-32 specified the application for allotment of a Permanent Account Number is to be made for the incorporation of the company.​ (Application for PAN can also be made through SPICE-INC-32)

Note: w.e.f. 01-07-2017, every individual who is eligible to get an Aadhaar number shall quote either the Aadhaar number or enrolment ID of the Aadhaar application form in the application form PAN.

How to Link the Aadhaar number with PAN Using the e-Filing Portal?

A taxpayer using their registered username and password is asked to log in on the e-Filing portal. After login, the person will get the “link Aadhaar” option under their ‘Profile Settings’.

If the taxpayer’s name and date of birth are identical to Aadhaar and PAN, the Aadhaar number will be linked with PAN.

How to Link the Aadhaar Number with PAN using the SMS Facility?

A taxpayer who wishes to link their Aadhaar number with PAN by using the SMS facility is required to send SMS to 56161 or 567678 in the format given below:

UIDPAN <1 blank space> <12 digit Aadhaar Number> <1 blank space> <10 digit PAN>

SMS to 56161 or 567678:

UIDPAN 222233334444 AAAPA8888Q

Aadhaar number will be automatically linked with PAN if the taxpayer’s name and date of birth are identical to PAN and Aadhaar.

What Are The Particularised Financial Transactions In Which Quoting of PAN is Compulsory?

According to rule 114B, the following are the transactions in which quoting of PAN is mandatory by every individual except the Consular Offices, the State Governments and the Central Government:

• Purchase and sale of a motor vehicle or any vehicle except two-wheeled vehicles.​ ​
• Opening an account [other than a Basic Savings Bank Deposit Account and a time-deposit referred at point No. 12] with a cooperative bank​ or banking company
• Creating an application for the issue of a debit or credit card.
• Opening an account of Demat with a participant, depository, custodian of securities or any other individual with SEBI
• Cash payment of an amount surpassing Rs. 50,000 to a restaurant or hotel against the bill at any one time.
• Payment in cash of an amount surpassing Rs. 50,000 in association with travel to any foreign country or payment for the acquisition of any foreign currency at any one time.
• Payment of an amount to a Mutual Fund surpassing Rs. 50,000 for the acquisition of its units
• Payment of an amount to a company or an institution surpassing Rs. 50,000 for acquiring debentures or bonds published by it.
• Payment of an amount to the Reserve Bank of India surpassing Rs. 50,000 for acquiring bonds published by it.
• Deposit with a co-operative bank or a banking company:-
  • ​Cash surpassing Rs. 50,000 during any one day; or
  • Cash deposit of aggregating during the period 09th November 2016 to 30th December 2016 to more than Rs. 2,50,000
• Payment in cash for an amount during any one day surpassing Rs. 50,000 for the purchase of pay orders or banker’s cheques or bank drafts from a banking company or a co-operative bank.
• A time deposit of amount aggregating to more than Rs. 5 lakh or surpassing Rs. 50,000 during a financial year with –
  • ​a co-operative bank or a banking company
  • a Post Office;
  • a Nidhi assigned to in section 406 of the Companies Act, 2013 or
  • a non-banking financial company
• Payment in cash or pay order or banker’s cheque of an amount or by way of a bank draft aggregating to more than Rs. 50,000 in a financial year. Instruments utilized for one or more pre-paid payments, as explained in the policy guidelines for operation and issuance of pre-paid payment instruments issued under section 18 of the Payment and Settlement Systems Act, 2007 of the Reserve Bank of India to a co-operative bank or a banking company or to any other institution or company.
• Payment of an amount total aggregate in a financial year as life insurance premium to an insurer exceeding Rs. 50,000
• A purchase contract or sale of securities(other than shares) for an amount surpassing Rs. 1 lakh per transaction
• Purchase or sale, by any person, of shares of a company not listed in a recognized stock exchange for an amount surpassing Rs. 1 lakh per transaction.
• Purchase or sale as referred to in section 50C of the Act of any immovable property for an amount surpassing Rs. 10 lakh or valued by stamp valuation authority at an amount surpassing ten lakh rupees.
• ​Purchase or sale of goods or services of any nature other than those particularized above for an amount surpassing Rs. 2 lakh per transaction.

NOTE:

• Minor individuals can quote the PAN of the person’s father or mother, or guardian provided the individual does not have any income liable to income tax.
• Any individual can make a declaration in Form No.60, enters into any of the above transactions if the person does not have PAN.
• ​Quoting of PAN is not needed by a non-resident in a transaction mentioned the before mentioned point.

How Does The Department Of Income Tax Guarantee That PAN Is Quoted On Transactions In Which Quoting Of Pan Is Mandatory?

It is a statutory responsibility of an individual receiving a document relating to financial or economic transactions declared by the Central Board of Direct Taxes (CBDT) to assure that PAN has been appropriately quoted in the documents quoting of PAN compulsory. Thus, the recipient of these documents will guarantee that PAN is mentioned in the respective document. E.g. PAN is mandatory to open a bank account, and hence the Bank will assure that the applicant has quoted their PAN at the moment of applying for a bank account.

Can One File Their Return Of Income Without Quoting PAN?

It is compulsory to quote PAN on the return of income of an individual. PAN is also quoted in all challans apart from the return of income for making payment of tax, agreement with the Income Tax Department, etc.

However, w.e.f., 01-09-2019, as per section 139​AA​, every individual who has been allotted a PAN and who has linked their Aadhaar number with PAN may furnish their Aadhaar number instead of a PAN for all the transactions where quoting of PAN is compulsory as per Income-tax Act. Thus, an assessee can file his return of income with effect from September 1, 2019, by quoting their Aadhaar number instead of mentioning their PAN.

How to Link The Aadhaar Number with PAN?

By utilising either of the two ways, any individual can link the Aadhaar’s number with PAN :

1. Using SMS facility
2. Using the facility portal on e-Filing.

For Obtaining the PAN, Does The Applicant Are Required To Pay Any Charges?

The applicants are required to pay a fee of Rs. 93 + GST as applicable, per PAN application. In case the PAN card is needed to be dispatched outside India, then the processing charge for PAN application is Rs. 864/- (application fees- Rs. 93 and dispatch charges-Rs. 771) will be required to be paid by the applicant. (additional GST also applicable).

Can An Individual Opt For A TATKAL Facility, If There Any For Allotment Of PAN?

No, since there is no such facility mentioned, any individual can not opt for a TATKAL facility for the allotment of PAN.

In Form 49A/49AA, what Information and Documents must be presented along with the PAN application?

As specified in Rule 114 of the Income-tax Rules, the documents must be submitted with the PAN application. The application form also includes and necessitates all the required details of the documents. Individual applicants have to produce documents pertaining to proof of identity, proof of date of birth and proof of address. The name appearing in the documents submitted of the applicant and the name as mentioned in the application form should match precisely along with the application.

Individual applicants should attach two recent colour photographs of size 3.5 cm x 2.5 cm with white background in the space as required and mentioned on the form. The photographs should not be clipped or stapled to the form. The image clarity on the PAN card will entirely depend on the clarity and quality of the submitted photograph affixed on the form.

If an Applicant Comes under Individual/HUF (Hindu Undivided Family), what Documents will Serve as Proof of Identity?

In the case of individual applicants being citizens of India, any of the following documents will work as proof of identity (including those located outside India):

Copy of following

• Aadhaar Card issued by India’s Unique Identification Authority; or
• Elector’s photo identity card of the applicant; or
• Driving License of the applicant; or
• Passport of the applicant; or
• Applicant’s ration card having a photograph; or
• Arm’s license; or
• Photo identity card issued by the Public Sector Undertaking or State Government or Central Government; or
• Pensioner card of the applicant with an attached photograph of the person; or
• Central Government Ex-Servicemen Contributory Health Scheme photo card or Health Service Scheme Card
• Identity certificate in original signed by a Gazetted Officer or a Municipal Councilor, as the case may be Member of Parliament or Member of Legislative Assembly; or
• Bank certificate containing bank account number and duly attested original photograph of the applicant on letterhead from the branch (along with the issuing officer’s name and stamp).

For HUF, an affidavit was made by stating the name of the Karta of Hindu Undivided Family, name of the father and address of all the coparceners on the application date and a copy of any of the before-mentioned documents in the name of Karta of HUF is needed as proof of identity.

In the case of Minor, any of the before mentioned documents of any of guardians/parents of such minor shall be considered to be the appropriate proof of identity for the minor applicant.

What Documents Will Be Considered As Address Proof In The Case Of Individual/HUF Applicants?

Copy of any of the following documents will serve as proof of address in case of individual applicants being citizens of India (including those located outside India) :

Copy of following:

1. Aadhaar Card publish by the Unique Identification Authority of India; or
2. Elector’s photo identity card; or
3. Driving License; or
4. Passport; or
5. Passport of the spouse; or
6. Post office passbook having the applicant’s address; or
7. Latest property tax assessment order; or
8. Domicile certificate; or
9. Allotment letter of accommodation not being more than 3 years old issued by Central or State Government; or
10. Document of Property Registration; or

Copy of following documents of not being older than three months

1. Electricity Bill; or
2. Landline Telephone or Broadband connection bill; or
3. Water Bill; or
4. Consumer gas connection card or the book or piped gas bill; or
5. Bank account statement; or
6. Depository account statement; or
7. Statement of the Credit Card; or

Note: In the case of an Indian citizen residing outside India, a copy of Non-resident External (NRE) bank account statements or a copy of Bank Account Statement in the country of residence (not older than three months) shall be address proof.

• Original identity certificate duly signed by an MP or MLA or Municipal Councilor or a Gazetted officer, as the case may be.
• Employer certificate in original.

For HUF, an affidavit issued by the Karta of HUF stating the name, name of the father and address of all the coparceners on the application date and a copy of documents mentioned above in the name of Karta of HUF is required as proof of address.

In the case of Minor, any of the documents as mentioned above of any of the parents/guardians of such minor shall be considered to be the relevant address proof for the minor applicant.

Can An Application On Plain Paper Be Considered for PAN?

Application for PAN is not allowed to be made on a plain sheet of paper. The application for PAN must be made in the prescribed form, i.e. Form No. 49A as the case may be Form No. 49AA. Form No. 49A, as per the ITR Act, is meant to be used by Indian citizens/Entities incorporated in India/Unincorporated entities/Indian Companies formed in India and Form No. 49AA is intended to be used by a person who is not a citizen of India/Incorporated entities created outside India/Entities unincorporated outside India).

In case the applicant is a company or being associated with it, which has not been registered under the Companies Act, 2013, then as specified under sub-section (1) of section 7 of the ITR Act for incorporation of the company, the application for Permanent Account Number allotment is to be made in SPICE-INC-32.

In Form 49A/49AA, What Shall Happen If An Individual Submits An Incomplete PAN Application?

TIN Facilitation Centers or IT PAN Service Centers shall not receive any deficient and incomplete PAN application. However, an individual can ask help from these centres, and they will assist applicants to fill up form 49A/49AA (as the case may be) correctly.

Is It Mandatory To Fill The Pan Application Form (i.e. Form 49A/49AA) in Block Letters?

Yes, it is necessary to fill the PAN application form [like Form 49A/49AA (as the case may be)] to be filled legibly in BLOCK LETTERS and preferably in black ink. It should also be noted that each box, wherever provided, should carry only one character (number/punctuation sign/ alphabet), leaving a blank box after every word.

In The Case Of Individual Applicants, What Documents Will Serve As Proof Of Date Of Birth?

Copy of any of the following documents will be considered as the proof of date of birth in the case of individual applicants being Indian citizens (including those located outside India):

1. Birth Certificate issued by any office authorized or the Municipal Authority to issue Birth and Death Certificate by the Indian Consulate or the Registrar of Birth and Death as defined in clause (d) of sub-section (1) under section 2 of the Citizenship Act, 1955 (57 of 1955); or
2. Order of pension payment; or
3. Certificate of Marriage issued by Registrar of Marriages; or
4. Certificate of Matriculation; or
5. Passport; or
6. Driving License; or
7. The Government’s issued Domicile Certificate; or
8. Affidavit stating the birth date which is sworn before a magistrate

In The Case Of An Applicant Other Than Individual/HUF, What Documents Are Required To Be Submitted?

In the case of an applicant other than individual/HUF, the following documents are required to be submitted along with the PAN application:

• Partnership Firm registered or formed in India- Copy of partnership deed or Copy of the Registrar of Firms issued Certificate of Registration.
• Limited Liability Partnership registered or formed in India- Copy of the Registrar of LLPs issued Certificate of Registration
• Association of Persons (Trust) registered or formed in India- Copy of Charity Commissioner issued trust copy or deed of certificate of the registration number.
• Association of Person(other than trusts), Local Authority, Body of Individuals, or Artificial Juridical Person registered or formed in India- Copy of Agreement or copy of the certificate of registration number issued by the registrar of co-operative society or any other competent authority or charity commissioner or any other document originating from any department of State or Central Government establishing address and identity of such individual.

In the Case Of Individuals Who Are Not Citizens Of India, What Documents Will Serve As Proof Of Identity?

Copy of following will serve as identity proof in case of individuals not being a citizen of India :

1. Passport copy, or
2. Copy of Government of India’s issued Person of Indian Origin (PIO) card, or
3. Copy of Government of India’s issued Overseas Citizen of India (OCI) card, or
4. Copy of other national or citizenship Taxpayer Identification or Identification Number

Number duly attested by “Apostille” (in respect to the countries which are signatories to the Hague Apostille Convention of 1961) or by the High Commission or Consulate in the country or Indian Embassy where the applicant is authorised or located officials of overseas branches of Scheduled Banks registered in India.

Can One Application On Behalf Of The Non-Resident, Idiot, Court Of Wards, Minor, Lunatic?

A non-resident, idiot, mentally retarded, deceased, wards of court, minor, lunatic, and such other persons as stated in Section 160 of Income-tax Act, 1961 can be represented through a Representative Assessee.

In such a situation,

• Details of the minor, non-resident, lunatic, idiot, mentally retarded, wards of court, deceased etc., should be provided in the application for PAN.
• In item 14 of the PAN application, details of the representative assessee have to be provided.

Address Proof and Proof of Identity is also needed for the representative assessee.

In Form 49A/49AA, Who Has To Sign The PAN Application?

In Form 49A/49AA, the application form must be signed (in case of persons unable to sign-left thumb impression) by :

1. The applicant; or
2. In the case of HUF- Karta; or
3. Company Director; or
4. Authorised Signature in case of Association of Persons, Local Authority, Artificial Juridical Person and Body of Individuals; or
5. In case of Firm/LLP- Partner; or
6. Trustee; or

In case of Mentally-retarded/minor/deceased/idiot/lunatic/, by a Representative Assessee.

In Form 49A/49AA, What Is The Process Of Signing The PAN application?

The applicant has to attach a signature at three places in form 49A/49AA. If the applicant cannot sign the form, then at the place meant for signatures, the applicant’s Left-Hand Thumb impression should be affixed and attested by a Gazetted Officer, a Magistrate, or a Notary Public under official stamp and seal. Three places where signature/thumb impressing are required as follows:

• One left-hand thumb impression/signature should be given across the photo affixed on the left side of the form in such a way that a portion of the signature or the thumb impression is on the form as well as on the photo.
• On the right side of the form, one left-hand impression/signature impression should be made within the box provided. The signature or the thumb impression should not be on the affixed photograph on the right side of the form.
• At the end of the form, another left-hand thumb impression/signature impression should be provided. Within the box provided for signature /left-hand thumb should be.

Applications are liable to be rejected if not signed in the given manner and the space provided for signature.

In The Circumstances Of Individuals Not Being Citizens Of India, What Documents Will Be Considered As Address Proof?

In case of people who are not a citizen of India, copy of the following will serve as proof of address:

1. Copy of passport, or
2. Copy of Government of India’s issued Person of Indian Origin (PIO) card, or
3. Copy of Government of India’s issued Overseas Citizen of India (OCI) card, or
4. Copy of other national or citizenship Taxpayer Identification or Identification Number

Number duly attested by “Apostille” (in respect to the countries which are signatories to the Hague Apostille Convention of 1961) or by the High Commission or Consulate in the country or Indian Embassy where the applicant is authorised or located officials of overseas branches of Scheduled Banks registered in India.

1. Copy of the Applicant’s Statement of Bank account in the country of residence, or
2. Copy of the Applicant’s Non-resident External (NRE) bank account statement in India, or
3. Copy of the Applicant’s Certificate of Residence in India or Residential permitted by the State Police Authorities, or
4. Copy of the Applicant’s Registration certificate published by the Foreigner’s Registration Office showing Indian address, or
5. Copy of the Applicant’s Visa granted & appointment letter or the employer’s issued contract from Indian Company & Certificate (original) of Indian address.

If Applicants Are Unincorporated Entities Formed Outside India/Entities Incorporated Outside India, What Documents Will Serve As The Relevant Proofs?

In case of applicant being Unincorporated entities formed outside India/entities incorporated outside India, a copy of the following will serve as relevant proof:

Certificate of Registration authorised by the country where the applicant is located, where the number must be duly attested by “Apostille” (in respect of countries which are signatories to the Hague Apostille Convention of 1961) or by the High Commission or Consulate in the country or Indian Embassy where the applicant is authorised or located officials of overseas branches of Scheduled Banks registered in India.

Copy of approval granted to set up an office in India or of registration certificate issued in India by Indian Authorities.

In Form 49A/49AA, is it Compulsory To Provide the Assessing Officer Code?

The applicants need to compulsorily fill up and produce the Assessing Officer (AO) Code in Form 49A/49AA. AO Code (i.e. Range Code, AO Number and Area Code, AO Type) of the Jurisdictional Assessing Officer. These details can be obtained from the PAN Centre or websites of PAN service providers or the Income Tax Office.

Does It Necessary To Provide A Father’s Name For A Married Female?

Applicants should provide their father’s name while providing the full name, and hence, the married female should also provide their father’s name and not their husband’s name.

How Can One Check The Status Of The Individual’s PAN Application after making the PAN application?

​After applying for PAN, an individual can check the status of their application by using the track status facility available at websites of the UTIITSL or NSDL or Income Tax Department.

After Getting PAN, Is It Necessary To File a Return of Income?

According to the statement mentioned under section 139, a return is must be filed only if the individual is liable to file a return of income.

It is not mandatory to file a return of income after getting PAN.

Should a Person Intimate Their PAN to the Deductor With Regards To Person Deducting Tax?

​​Yes, one should intimate their PAN to the deductor with regards to the person deducting tax. Non-furnishing of PAN to deductors charged from 1st April 2010 results in TDS at a much steeper rate of 20% or even more.​

Can Any Person Hold More Than One PAN?

​​Any individual cannot hold more than one PAN. If a PAN is allotted to an individual, then the person cannot apply for obtaining another PAN. Under​​ The Income-tax Act, 1961 of Section 272B​, a fine of 10,000/- is liable to be imposed for possessing more than one PAN.

If an individual has been allotted more than one PAN, then the person should immediately surrender the additional PAN card(s).

If, By Mistake, An Individual Has Been Using Different PANs for Different Purposes, Like One For Filing My IT Return and tax payment and another for a Demat account, then how can one resolve such a problem?

According to Income Tax Act, it is advisable to hold only one PAN, preferably the one used for purposes of Income-tax and should immediately surrender the other number. The financial institutions where the latter PAN number has been quoted should be informed of the correct PAN.​

In Case of Issues Relating to PAN, Whom To Contact?

One should ​​​contact NSDL in case of PAN card is not received by the applicant.

The NSDL or Income Tax Department in any of the following means can be contacted.

What is the Validity Of A Person’s PAN?

​​PAN is valid for the lifetime once obtained by the PAN holder throughout India. The change of address or the accessing officer does not affect PAN. However, by providing the details in the form for “Changes or Correction in PAN Data Or/ And Request For New PAN Card”, any type of change can be made in the database of the PAN (i.e. details provided at the time of obtaining PAN), which should be intimated to the Income Tax Department.​

How Can An Individual Apply for PAN Correction?

By providing the details in the form for “Changes or Correction in PAN Data Or/ And Request For New PAN Card”, any type of change can be made in the database of the PAN(i.e. details provided at the time of obtaining PAN), which should be intimated to the Income Tax Department both online or offline mode.

• For offline mode, at the nearest PAN facilitation centre, all people are required to submit the “Changes or Correction in PAN Data Or/ And Request For New PAN Card” form.
• For online mode, one needs to visit through the online portal of NSDL and opt for the “Changes or Correction in PAN Data Or/ And Request For New PAN Card” option.

What is the Penalty Charged On A Person for not Complying With The Provisions Relating to PAN?

​​In case of any default by the taxpayer in complying with the provisions relating to PAN, then as per Section​ 272B, a penalty will be charged to the taxpayer for the following issues:

1. a person not obtaining PAN, even though the individual is liable to get PAN, or
2. a person in any prescribed document intentionally quoting incorrect PAN in which PAN is to be quoted or
3. a person is intimating incorrect PAN to the individual deducing tax or individual collecting tax.

As mentioned, under​​ section 272B, the penalty amount that will be charged to the taxpayer will be Rs. 10,000, which under the provisions of section 139A​, can be levied for failure to comply with and for failure to Quote or to Quote invalid PAN, a penalty of Rs. 10000 per default shall be levied.

How to Get The Area Code For My Area for the PAN Allotment?

It is mandatory to provide the area Code while applying for TAN and PAN. The applicant must fill up the area Code (i.e., Area Code, AO Type, Range Code, AO Number) of the Jurisdictional Assessing Officer. These details can be obtained from the official site of NSDL.

What is E-PAN?

The PAN provided in PDF format rather than a physical card is known as E-PAN. The E-PAN card in the format of PDF will be sent to the e-mail ID specified in the application form of PAN. The PAN applicant will have to designate when submitting the PAN application if the physical PAN Card is not required. In such circumstances, an Email ID will be compulsory & E-PAN Card will be provided to the PAN applicant at their specified email ID, and in such cases, a physical PAN Card will not be dispatched. For an E-PAN card, the charges are different from a physical PAN card.

What is PAN verification?

As per the database of the Income Tax Department, the PAN verification functionality helps the deductor in verifying whether the provided PAN by the deductee (Tax Payer) is valid.​

What outcomes are faced by an individual for Not linking PAN with Aadhaar Numbers?

​The Central Board of Direct Taxes has notified Rule 114AAA prescribing the manner and consequences if PAN becomes inoperative. The Rule 114AAA(2) presents that where an individual, whose PAN has become inoperative, it shall be deemed that the person has not quoted furnished, or intimated the PAN, as the situation may be, and under the Act, the individual shall be liable for all the consequences for not quoting, furnishing or intimating the PAN.

However, the individual can reactivate their PAN by subsequently intimating their Aadhaar to the department.

What is the Operation Model of PAN?

The issuance of PAN, verification, maintenance works, and delivery on the PPP- public-private partnership models like PSK- Passport Seva Kendra for reasons of efficiency, effectiveness, and economy.

The reputed entities like UTI Infrastructure Technology Services Limited (UTIITSL) and NSDL e-Governance Infrastructure Limited (formerly National Securities Depository Limited) have been consigned by Income Tax Department as instructed service providers for the processing of applications, handling, verifying, and collecting personal documents like age, address, proof of ID, clarification with the applicants, printing the letter and the card and then mailing it.

After the successful processing of the application documents, such processing agencies obtain the new PAN number online from the server of the iT department. Some authorities in India may command the processing, handling, and delivery of financial documents as well as personal ID by private contractors or for a violation of privacy.

On the official TIN website, the e-Gov centres of NSDL can be located. By using Aadhaar based eSignature, it has now become very easy for online applications at NSDL e-Gov’s website. An individual can register themselves first at e-Gov’s website of NSDL.

The applicant receives a token number after registration. Any individual can continue with filling form. The applicant will be able to save the details and complete the form at their convenience by logging in using their registered details. One can upload signature/photo and supporting documents and, using Aadhaar and OTP, can finally eSign the application.

People can download and keep a copy of the signed form after successful e-Sign, for their reference. An acknowledgement form and receipt are also received through e-mail at registered e-mail ID.

On the official website of UTIITSL, centres can be located.

What are Outcomes for Not linking PAN with Aadhaar Number

The manner and consequences are prescribed by the Central Board of Direct Taxes have notified Rule 114AAA if PAN becomes inoperative.

The Rule 114AAA(2) presents that where an individual, whose PAN has become inoperative, it shall be deemed that the person has not quoted furnished, or intimated the PAN, as the situation may be, and under the Act, the individual shall be liable for all the consequences for not quoting, furnishing or intimating the PAN.

However, the individual can reactivate their PAN by subsequently intimating their Aadhaar to the department.

Further, if an individual fails to link PAN-Aadhaar by the due date, then under section 234H, the individual shall have to pay a fee, maximum of Rs. 1,000. This fee due to the non-intimation of Aadhaar shall be an extension to the other consequences the individual has to face if PAN becomes inoperative.

What is Instant-PAN?

New functionality has been launched by the Income-tax Dept. on the e-filing portal, which permits a PAN to the assessee based on their Aadhaar Number.

This facility can be practised by an assessee only if the following requirements are satisfied:

1. The person has never been allotted a PAN;
2. The person’s mobile number is linked with his Aadhaar number;
3. The person’s complete date of birth is available on the Aadhaar card; and
4. The person on the date of application for PAN should not be a minor.

How to Get Instant PAN Using the Instant-PAN Functionality?

1. Visiting the official site and tapping on the link ‘Instant PAN’ through Aadhaar’ addressed on the right-hand side
2. Click on ‘Get New PAN.’
3. Enter the Applicant’s Aadhaar Number
4. Enter the OTP obtained on the mobile number linked with the Aadhaar Number.
5. Validate the Details of Aadhaar
6. Validate Email-id
7. Finally, Download the e-PAN

Preparing Project Report for A Loan From Banks: Starting and running a business unit is not a small thing as it requires a lot of hard work and effort for a Businessman to manage a business. Starting a business involves numerous components, especially arranging capital for initiating and running the business. A preferable way of obtaining capital is by borrowing a loan from a bank or a Financial Institution.

In the present scenario, whether a person starts a new business or wants to expand their existing business, the first thing they would require is finance or capital. Finance is considered the life-blood of a business, be it small or large.

In the past few years, the Government of India has also come up with numerous loan and financial support schemes to encourage entrepreneurs to come up with innovative business ideas. The loan schemes under the Government mainly target the MSME sectors.

Acquiring loans from banks isn’t an easy process; instead, it requires paperwork and documentation. Even the documentation varies from bank to bank and depending upon the loan amount. Every business person has to present all the documents, especially a project report, before the bank officials acquire a loan.

This article will discuss the project report required to acquire a loan for MSME sectors and how to prepare it.

• What is A Project Report?
• Contents or Components of A Project Report
• Who Can Prepare A Project Report

What is a Project Report?

A Project report for a loan can be defined as the document that describes the business or project idea to the bank or financial institutions to acquire a loan for starting or expanding a business. The project reports are mainly submitted to Public Sector Undertaking Banks for the approval of loan amount under the Micro Units Development & Refinance Agency (MUDRA) scheme. The project report consists of every minute detail of the business enterprise, including its background and operation details.

The project report must be neat and professionally prepared and should not give out excessive information making it lengthy. It should be in simple language and easy to understand. The contents of the project report may also vary from bank and bank and depending upon the loan amount.

Contents or Components of A Project Report

We have discussed the project report in the earlier paragraph; now, let’s look at the contents of a project report. As discussed earlier, the contents of the project report may vary from bank to bank and depending on the loan amount. But here, we have listed the components common to all the project report for loan.

• Summary or Brief of the Business or Project: In this point, the person preparing the project report must mention the basics of the business, its operations, and the financing activities. In short, it is a brief of the whole business or project idea.
• Scope and prospect of the Business: The point lines out the scope or aim of the project or business idea. It also describes the current status and future prospects, and growth of the business. In this point, the project reporter must point out the financial feasibility of the whole business idea.
• Details of the Owner or Promoter & Other executives of the Business: The point mentions the promoters and other key personnel related to the business or project. It also mentions their educational qualifications and other essential details.
• Details of Resources required: The point describes all the resources required for the project or business. It also mentions the cost of the resources. It includes the details of the infrastructure, machinery, and other technical requirements.
• Details of the Target Market or Customers: In this point, the reporter mentions the prospective market and the target customers of the offerings made by the business or project.
• Requirements of Investment: The point lines out the specific details of all the required investments of the entire business or project idea.
• Financing Sources: The points include the details of the sources of finances for the business. It mentions the details of all the sources of owned and borrowed funds acquired by the promoters.
• Financial Statement of the Project or Business: The point contains the details of the business’s financial statement, such as the balance sheet and profit & loss statement.
• Information of Offerings: The point keeps priority in the report as it mentions the offerings, i.e. goods and services that the business is planning to launch in the market.
• Financial Projections: The point contains the details of quantitative analysis of income, expenses, and funds and their applications in the business.
• Breakeven Analysis of the Project or Business: It mentions the project’s break-even point, its cost, and its benefits.

Conclusion: This part consists of the SWOT analysis of the project and draws attention to the strength, weaknesses, opportunities, and threats to the business. It also gives a brief conclusion of the entire business idea.

Who Can Prepare A Project Report

From the earlier discussions, it is clear that a project report serves as a prime component in the loan application. It is considered a crucial document in the process of acquiring a loan to start or expand a business. So, to get the approval of the loan, the report should be professional and straightforward to understand. The report should be clean, simple, and easy to understand; simultaneously, it should deliver all the required information to the loan approving official.

A report preparation needs a lot of expertise and professionalism. It should only be prepared by a person who has specific and professional knowledge in the field. It is recommended that professionals with utmost expertise such as Chartered Accountants, Ex-Banker officials, or any other Financial Expert prepare the project report to make it good enough to get approval from the financial institutions.

Taxability for Bank Accounts for Seafarers: Non-resident seafarers or non-resident Indians (NRIs) can open three types of bank accounts in India which will be discussed further in this article.

• What is a Non-resident External Account (NRE)?
• What is a Non-resident Ordinary Account (NRO)?
• What is a Foreign Currency Non-Resident Account (FCNR)?
• FAQs on Bank Accounts for Seafarers

What is a Non-resident External Account (NRE)?

The NRE account is rupee-denominated (Indian), offering complete security. The foreign currency deposited into this account is converted to INR. One can transfer the funds, including the principal & interest amount, to a foreign account from an NRE account without any complications and restrictions. These accounts can be savings, current, recurring accounts, or fixed deposits. As per section 10(4)(ii), interest earned on this account is generally tax-free. Consequently, no TDS is deducted by the bank. However, it depends on the person’s resident status under FEMA.

An NRE account is primarily used for carrying out personal banking, business transactions, and making investments in India.

Note: The amount deposited into these accounts must be earned outside India.

What is a Non-resident Ordinary Account (NRO)?

The NRO account is a rupee-denominated saving or current account for managing the income earned in India by the NRIs. Interest received on this account is taxable, and the bank deducts TDS at a 31.2% rate. The account-holders can deposit and manage their assembled rupee funds without any hassle. For an NRO account, one can apply jointly with a resident Indian or an NRI. The NRO account allows one to receive funds in Indian or foreign currency.

It is advised to file an income tax return if the bank has deducted TDS on the interest earned during the year as one can get a refund of the whole amount deducted as TDS as a non-resident seafarer does not have any income in India and enjoy a tax-free limit of Rs 2,50,000 per annum. Also, if you don’t file the return, the ITD may send a notice for filing of return as one can have some income on which the TDS has been deducted but not claimed by the deductee.

What is a Foreign Currency Non-Resident Account (FCNR)?

The FCNR is a fixed deposit account opened for depositing income earned overseas and transferring the foreign income of the non-residents to India. The account is held in foreign currency. These accounts are exempt from tax or TDS in India under section 10(15)(iv) (fa), so no TDS is subtracted by the bank for the interest received on such accounts.

FAQ’s on Bank Accounts for Seafarers

Question 1.
Are non-resident seafarers allowed to have regular savings account in Indian banks?

Answer:
As per FEMA rules, non-resident Indians are not allowed to have regular savings account in the Indian banks. The non-resident Indians are obliged to have bank accounts in the form of NRE, NRO or an FCNR.

Question 2.
Are seafarers allowed to transfer their deposits from any NRE or NRO account to a regular saving account once they quit sailing? If so, do they have to pay taxes on such transfers?

Answer:
Yes, the seafarers can transfer their balance from an NRE or NRO bank account to any regular savings account. No tax is charged on such transfers.

Question 3.
For an NRE bank account, is the interest earned on such account tax-free if the individual seafarer becomes a resident of India, even for a single financial year?

Answer:
As per the FEMA rules, the interest earned on an NRE account is tax-free only when the account holder is a non-resident Indian. If the person for a financial year becomes a resident of India, the interest earned becomes taxable.

Question 4.
Are joint holders allowed for the possession of NRE or NRO accounts?

Answer:
Yes, NRE or NRO bank accounts are allowed to be opened by joint holders. Two NRIs can open an NRE account, and an NRI can open an NRO account along with another NRI or an Indian citizen.

Question 5.
What are the limits for TDS reduction on the interests earned on the NRO account?

Answer:
On the interest earned on NRO accounts, the TDS is deducted at a 30% rate along with surcharge and applicable cess. The TDS rate then sums up to a 31.2% rate on interest earned up to Rs. 5 million. However, the total NRO interest can be subjected to TDS without any exemption.

House Rent Allowance HRA Section 10 (13A): HRA that stands for House Rent Allowance is a grant paid by employers to employees to cover their house rent. HRA is a good means for waged professionals for saving tax and that is why; almost every company includes it as a part of their salary. Such allowance is chargeable for the individual. However, under Section 10 (13A) of the Income Tax Act, there is some exemption to House Rent Allowance. Whether state or central management or private, for all employees, the deduction is acceptable. According to this section, self-employed individuals are not allowed to get any deduction. Readout below to know more about tax exemption, documents required to claim HRA deduction, and much more.

• How Much HRA Tax Can Be Deducted?How Much HRA Tax Can Be Deducted?
• What Conditions Are Required To Claim HRA Deduction?
• What Documents Employees Have To Submit To Claim HRA Deduction?
• How to Claim House Rent Allowance in Income Tax Return?
• Can Employee Gets HRA Exemption If Not Claimed On Time?
• Conclusion

How Much HRA Tax Can Be Deducted?

While calculating the House Rent Allowance, salary is taken on a due basis. It includes basic salary, Dearness Allowance (DA, if it enters into retirement benefits), and fixed percentage commission received on the basis of sales turnover accomplished by the employee. The salary is taken for the period during which HRA is received.

• The tax deduction for House Rent Allowance is the least of the exact HRA received.
• 40% of the income for the non-metro cities while it’s 50% if the rental apartment is in Mumbai, Kolkata, Delhi, or Chennai like Metro City.
• Excess of rent paid less than 10% of the annual salary.

What Conditions Are Required To Claim HRA Deduction?

The various sections of the Income Tax Act support paid individuals and professionals to make their residential house expenditures affordable. House Rent Allowance is one of the vital sub-components of the salary of both private as well as public sector organizations. HRA is given by the employer to an employee when he/she stays in a rental house. However, there are some conditions that must get met to claim exemption:

• The deduction for House Rent Allowance is permissible only when an employee pays rent for residence. No deduction is allowable when an employee pays no rent for any certain period. The income tax officer can enquire employee for rent receipts. While filing Income Tax Return, there is no requirement to attach any document.
• The deduction is calculated on a monthly basis if there is any change from the city of residence (from metro to non-metro), amount of salary, HRA, or rent.
• If the employee does not receive any exemption from the employer, then no deduction is acceptable as per section 10. However, one can avail an HRA tax deduction for lease paid under Section 80GG. Under this section, one can claim the minimum of rent paid in excess of 10% of the annual income, 25% of the total income, and Rs 5000 per month.
• HRA is permissible even if an employee is paying rent to any family member. Though there is no lawful prerequisite still is advisable to pay rental charges. The employee gets about a 30% deduction. However, one cannot pay rent to their spouse as in regards to relationship, they are supposed to take the housing together. These transactions can let inspection by the income tax department. Even if one is leasing the house from their parents, it is essential to keep documentary evidence stating financial transactions regarding tenancy.
• If the employee holds a house property but resides in a rented property, then also he/she can avail the benefit of the deduction for the principal repayment, interest paid, and HRA.
• An employee who seeks tax exclusions under Section 80GG cannot enjoy any benefit associated to self-occupied property assets they hold.
• HRA exemption and home loan interest exemption as per Section 24B and payment of housing loan under Section 80C can be appealed simultaneously.
• No deduction is permissible for the maintenance charges if an employee pays maintenance charges distinctly.

What Documents Employees Have To Submit To Claim HRA Deduction?

• An employee should submit Form No. 12BB for claiming HRA exemption to the employer. If the total rent paid during a certain year surpasses Rs 1 lakh then an employee should submit the PAN of the landlord in this form. In the case of more than one property owner, an employee should submit the details of all landholders.
• If the owner does not have a PAN, then an employee should submit a declaration to this consequence from the landowner including the owner’s name and address to the employer.
• If the HRA is up to Rs. 3000 per month, then there is no need for the employee to submit the rental receipt to the employer.

How to Claim House Rent Allowance in Income Tax Return?

• Filing ITR-1: After all deductions in “Income from Pension/ Salary, one has to input taxable salary.
• Filing ITR- 2, 2A, 3, 4, 4S: In any of these Income Tax Return forms, one has to use Schedule S and input the HRA deduct portion in point 2(iii). An individual has to feed the taxable portion on point 3 along with other taxable payments.

Can Employee Gets HRA Exemption If Not Claimed On Time?

An employee staying at a rented house gets House Rent Allowance from its employer. An employee can claim for partial or full HRA exemption according to Section 10 of the Income Tax Act. For claiming the HRA exemption, one has to submit some essential documents as proof of evidence. If an employee forgets to submit the rent agreement and rent receipts as submission proof, then, they can claim the HRA deduction while filing an income tax return. In case, if they again miss claiming the HRA while filing an ITR, then they can file a revised return to correct it before the assessment year ends.

Conclusion

House Rent Allowance or in short, HRA, is an additional help offered by an employer to its employees. One has to submit the documents such as rent agreement and rent receipts to the employer to avail of HRA deduction. If the rent payment exceeds Rs 1 lakh then one has to submit the PAN of the landlord. If an employee is unable to submit the proof of rented accommodation then HRA is taxable in such case.

Save Yourself From Clubbing Provisions for The Gifts Made In Cash: There are certain taxpayers who have substantial taxable income and are shifting some portion of their income to other persons to reduce tax liability. This is done by either shifting assets or a part of revenue. In order to handle such situations, the clubbing provisions were introduced by IT Department to make the correct persons liable to pay taxes. It means that if an individual does not pay taxes, such clubbing provisions will be applied, and the tax amount will be recovered from the individual who is the owner or who is carrying such an asset.

• What Is Clubbing?
• Several Clubbing Provisions
• How To Save Yourself From Clubbing Provisions For The Gifts Made In Cash?
• Relevant Case Laws

What Is Clubbing?

Clubbing is the inclusion of another person’s income into the assessee’s total income for the computation of taxes.

There are some instances under the Income Tax Act where another person’s income is required to be included in another person’s income. This is known as ‘Clubbing of Income’.

For example, suppose a husband transfers a part of his income to his wife’s name to reduce his personal tax burden. In such cases, clubbing provision will be applied, and such transferred income shall be added back into the husband’s payment for computing taxable income.

The main reason for introducing clubbing provision is to curb the unfair practice of tax evasions. However, if all the mentioned conditions are satisfied, then clubbing shall be done irrespective of the intention of not evading taxes.

Several Clubbing Provisions

According to Section 64 of the Income Tax Act, 1961, it provides the provisions of clubbing. As per Section 64, while computing the total income of any individual, inclusion of all such incomes as arises indirectly or directly –

• Section 64(1)(ii)– To the wife of such an individual by way of salary, fees, commission, or any other form of remuneration, whether in cash or in-kind, from a concern in which such individual has a substantial interest. However, clubbing provision shall not be applicable concerning any income arising to the spouse where the spouse possesses technical or professional qualifications. The income earned is solely attributable to the application of his or her experience and technical or professional knowledge.
• Section 64(1) (IV)– When assets are transferred to the spouse of such individual directly or indirectly otherwise than for adequate consideration or in connection with an agreement to live apart. However, when an individual transfer any house property to his or her minor child/spouse otherwise than for adequate consideration, the transferor, in that case, is deemed to be the owner of the house property so transferred as per Section 27(I) and the total income shall be taxable in the hands of the transferor under Section 27(I) not covered under Section 64(1) (IV).
• Section 64(1) (VI)– When assets are transferred to the son’s wife, of such individual, directly or indirectly on or after June 1, 1973, to the son’s wife by such individual otherwise than for adequate consideration.
• Section 64(1) (VII)– When assets are transferred to any person or association of persons indirectly or directly otherwise than for adequate consideration to the association of persons or person by such individual, to the extent to which the income from such assets is for the deferred or immediate benefit of his or her spouse.
• Section 64(1) (VIII)– When assets are transferred to any person or association of persons directly or indirectly on or after June 1, 1973, otherwise than for adequate consideration, to the association of persons or person by such individual, to the extent to which the income from such assets is for the deferred or immediate benefit of his son’s wife.
• Section 64(1) (A)– To the individual’s minor child, or not being a minor child but suffering from any disability as specified in Section 80U. However, provisions of clubbing shall not apply in respect of such income as accrues or arise to the minor child on account of any:
  • Manual work done by him; or
  • Activity that involves the application of his skill, specialized knowledge or talent and experience.
• Section 64(2) – In the case of an individual being a member of an undivided Hindu family, any property having been the separate property of the individual has, at any time after December 31, 1969, been converted by the individual person into property through the act of impressing such discrete property with the character of property belonging to the family or including it into the common stock of the family or been transferred by the individual, directly or indirectly, to the family otherwise than for adequate consideration (the property so converted or transferred being in the future referred to as the converted property), then, notwithstanding anything contained in any other provision of this Act or any other law for the time being in force, for computation of the total income of the individual under this Act for any assessment year starting on or after April 1, 1971,
  • The individual shall be considered to have transferred the converted property, through the family, to the members of the family for being held by them jointly;
  • The income derived from such converted property or any part thereof shall be considered to arise to the individual and not to the family;
  • where such converted property has been the subject matter of a partition (whether total or partial) amongst the members of the family, the income derived from such converted property as is received by the spouse on a division shall be deemed to arise to the wife from assets transferred indirectly by the individual to the wife and the provisions of sub-section (1) shall be applied accordingly.

But provided that the income referred to in clause (b) or clause (c), if included in the individual’s total revenue, shall be excluded from the family’s total income or, as the case may be, the spouse of the individual.

Note: – Property includes any interest in the property, the proceeds of the sale, movable or immovable, and any money or investment for the time being representing the proceeds of sale thereof and where the property is converted into any other property by any method, such other property. Also, for the purpose of Section 64, the income also includes loss.

How To Save Yourself From Clubbing Provisions or The Gifts Made In Cash?

There are various ways to save yourself from the above provisions of clubbing and can do proper tax planning for saving taxes. Adequate consideration shall be given while transferring assets.

The provisions of clubbing shall be applied only if the assets were transferred without giving adequate consideration. If an individual transfers any assets with adequate consideration, such transaction shall not come under the preview or provisions of clubbing.

Example: A husband made a cash gift of ₹500,000 to his spouse via cheque. A fixed deposit is made by the spouse with the said amount in her saving bank account at an 8% interest rate. The interest thus earned on this fixed deposit shall be taxable in the hands of the husband as per Section 64(1) (IV).

Example: A husband made a cash gift of ₹500,000 to his spouse via cheque. A total investment of ₹10 00,000 (out of which ₹500,000 was transferred as a cash gift) is made by the spouse and incurred a loss of ₹200,000 in that year. The propionate loss of ₹100,000 shall be clubbed with the husband.

Note: – As per Explanation 3 of Section 64, for the purposes of Section64 (1) (IV) and Section64 (1) (VI), where an individual directly or indirectly makes the transfer of assets to his spouse or son’s wife are invested by the transferee—

• in any business, such expenditure being not in the nature of the contribution of capital as a partner in a firm or, as the case may be, for being admitted to the benefits of partnership in a firm, that part of the income arising out of business to the transferee in any preceding year, which bears the same proportion to the payment of the transferee from the company as the value of the assets aforesaid as on the first day of the preceding year bears to the total expenditure by the transferee as on the said day in the business
• in the nature of the offering of capital as a partner in a firm, that part of the interest receivable by the transferee from the firm in any preceding year, which bears the same proportion to the interest receivable by the transferee from the firm as the value of financing aforesaid as on the first day of the preceding year bears to the total investment by way of capital contribution as a partner in the firm as on the said day shall be included in the total income of the individual in that previous year.

Example: A husband purchased jewellery worth ₹10 00,000 from his wife for consideration of ₹12 00,000. Such proceeds are used by the wife for making a fixed deposit into the bank account at an interest rate of 8% per year. In such case, only ₹16,000 (proportionate interest on the excess payment of ₹200,000) shall be clubbed in the hands of the husband. The remaining interest earned shall be considered as the wife’s income as it is received on the transfer of an asset with adequate consideration and shall not be considered under the provisions of clubbing.

In other words, if the spouse transfers an asset such as jewellery, precious stone, bullion, archaeological collections, paintings, drawings, sculptures, debentures, share, etc., on the fair market value, then the provision of clubbing shall not be applicable. The fair market value of such assets shall be calculated in the similar manner as followed for computation of capital gain.

Transfer Assets In Other Relation

The provisions of clubbing shall be applicable only if the transfer is made to: –

• Spouse
• Minor Child (Daughter or son)
• Son’s wife
• HUF

So, suppose the asset transfer is made to other relations such as parents, son or daughter (above 18 years of age) or grandchildren etc. In that case, it will not fall under the provisions of clubbing even if the transfer of such asset is without consideration.

Note:– Income can only be clubbed when there is conclusive proof for the deferred or immediate benefit of their spouse or son’s wife for the transfer of such assets.

Example: Suppose a father made a cash gift of ₹10 00,000 to his major son via cheque. A fixed deposit is made by his son with the said amount in his savings bank account at an 8% rate of interest. The interest earned on this fixed deposit shall not be clubbed in the father’s hands, and such income shall be taxable in the son’s hands. At the time of accrued income and transfer of assets, the relationship of spouse or son’s wife shall exist.

The provisions of clubbing shall be applicable when the relationship of husband and wife or son’s wife shall exist at the time of accrual of income and the transfer of assets. So, when the relationship doesn’t exist at the time of transfer of accrual income or assets, then such income shall not be clubbed in the hands of the individuals.

Example: Suppose a fiancé (engaged partner) made a cash gift of ₹10 00,000 to his engaged life partner via cheque and made a fixed deposit with the said amount in her saving bank account at an interest rate of 8%. Interest thus earned on such fixed deposit shall not be clubbed as the relationship of husband and wife does not exist while the transfer of such assets took place.

Other Points

• Any amount of income generated on the loan funds received from the spouse shall not be clubbed and shall be taxable only in the hands of the partner to whom such amount of income has been accrued. The only prudence is to repay the loan along with the nominal rate of interest. It is advisable to maintain proper documentary evidence for the loan and the repayments.
• Income generated on the indirect or direct transfer of asset to spouse or son’s wife shall fall under clubbing provisions. However, if any successive income is earned on the direct income generated from such asset transfer, it shall not be clubbed.

Example: Suppose the husband transferred ₹300,000 to his wife’s account and made a fixed deposit at an interest rate of 8% in her name, then the interest of ₹24,000 earned shall be clubbed in the husband’s income. However, any income earned by investing this amount of ₹24,000 shall not be clubbed in the husband’s hands.

Example: Suppose the husband transferred ₹100,000 to his wife’s account, and she deposited such a sum of money in her PPF account. The amount of interest earned from PPF shall be clubbed in the hands of her husband but shall not be taxable as it is exempted u/s 10.

• Where the individual person transfers cash to his/her spouse or minor child and the transferee acquires a house property out of such money; then the transferor shall not be treated as deemed owner of the house property. Such transactions will, however, attract the provisions of clubbing.

Relevant Case Laws

• Commissioner of Income Tax versus Smt. Pelleti Sridevamma (Supreme Court): When the cash gift is made to a minor son has been converted into a house property, and such house property is sold after a long period of time, then the capital gain earned on such transfer of house property shall also be clubbed in the hands of the parents.
• Commissioner of Income Tax versus Nawab Hussain Jah: If the cash gift made to the wife is invested in shares and after that, the shares are sold and the sales proceeding earned is converted into house property, then the income from such house property shall also be clubbed in the hands of the husband.

• Capital Gain Exemptions On Property Transfers
• Assessee Who Is Eligible
• Capital Gains Tax Eligibility
• The Exemption Is Subject To Certain Conditions
• Section 54 Provides An Exemption
• Eligible Company’s Definition
• What Does “Eligible New Asset” Mean?
• The Size of Exemption
• Five Year Lock-in Period

Capital Gain Exemptions On Property Transfers

Any capital gain arising to an individual or HUF from the transfer of a long-term capital asset that is a residential property (a house or plot of land) before the due date of furnishing the return of income under section 139 shall be exempt proportionate to the net consideration price so invested in the subscription of equity shares of an eligible company.

Assessee Who Is Eligible

Individuals as well as HUF

Capital Gains Tax Eligibility

Gain deriving from the sale of a long-term capital asset, such as a house or a plot of land. Such a capital asset transfer should occur between April 1, 2012, and March 31, 2017.

The Exemption Is Subject To Certain Conditions

The assessee has used the net consideration for subscription in equity shares in an eligible company before the due date for filing a return of income. Within one year of the subscription date, the suitable company must spend this money on purchasing an eligible asset.

If such a corporation does not fully or partially use this amount within one year, the unutilized portion is taxable as capital gain in the year in which the one-year limit expires.

Section 54 Provides An Exemption

If the capital gains from the sale of a residential property are invested in the acquisition or building of a residential property, an individual or HUF can benefit from tax exemptions under Section 54 of the Income Tax Act.

Section 54 does not apply to taxpayers such as partnership firms, LLPs, corporations, or any other association or body. However, the following are the conditions that must be met to benefit from the said section:

•  Assets that are classed as long-term capital assets must be classified as such.
• A Residential House is an asset that was sold. The income from such a house should be taxed as House Property Income.
• A residential house shall be purchased by the seller either one year before or two years after the date of sale/transfer. If the seller is building a house, the seller has more time, i.e. the seller has three years from the date of sale/transfer to complete the residential dwelling. The time of acquisition or construction shall be established from the date of receipt of compensation (whether original or extra payment) in the case of compulsory acquisition. The new residential dwelling must be located in India. The seller cannot claim the exemption if they buy or sell a home in another country.

The conditions listed above are cumulative. As a result, even if one of the conditions is not met, the seller is not eligible for the Section 54 exemption.

Eligible Company’s Definition

A corporation that meets all of the following criteria is considered eligible.

1. It is a corporation incorporated in India during the financial year in which the capital gain occurs or in a subsequent financial year up to the due date for filing the section 139 report of income (1)
2. It is a company in which the assessee has 50%+ share capital or more than 50% + voting rights after the assessee has subscribed for shares; it is a company in which the assessee has more than 50% share capital or more than 50% voting rights after the assessee has subscribed for shares.
3. It is a corporation that meets the Micro, Small and Medium Enterprises Act, 2006 (27 of 2006) definition of a small or medium enterprise, i.e. investment in more than 25 lakhs INR equipment but less than 10 crore INR.

What Does “Eligible New Asset” Mean?

New plants and machinery are not included in the definition of a new asset.

1. any apparatus or plant that another person used inside or outside India before being installed by the assessee
2. any plant or machinery installed in any residential accommodation or office, including guest-house accommodation
3. any office equipment, including computers and software
4. any type of vehicle
5. any apparatus or plant,

The entire cost is deducted (whether via depreciation or otherwise) in computing the income chargeable under the heading “Profits and gains of business or profession” in any prior year.

The Size of Exemption

The amount of exemption will be the lesser of the two options.

1. capital gain amount: (Capital Gain*Investment by an eligible company in an eligible asset ) / Consideration of net sale
2. Original asset’s net consideration: Capital asset’s sale price – Expenditure incurred for such transfer.

Five Year Lock-in Period

Suppose the company’s equity shares or new assets are sold or otherwise transferred within five years of their purchase; in that case, the capital gains that were previously exempted will be taxable as capital gains in the transfer year.

This part allows you to take advantage of the Capital Gains Account Scheme of 1988.

Meaning of Long Term and Short Term Capital Asset: A capital asset possessed by an assessee for more than 36 months immediately preceding the date of its transfer is known as the Long term of a capital asset.

• What Is a Capital Asset
• Period of holding in some cases

What Is a Capital Asset?

An asset possessed for less than or for precisely 12 or 36 months will be acknowledged as a short term capital asset. However, in the following cases, the Capital asset shall be treated as a long term capital asset if it is retained for more than 12 months.

• Preference or Equity shares held in a company listed in recognised stock exchange in India
• Any other security registered in acknowledged in stock exchange in India
• Units of UTI (whether quoted or not)
• Equity-oriented units of the fund
• Zero-coupon bonds (whether quoted or not)
• Preference shares or Unlisted Equity held in a company (if the transferal of such shares takes place on or before 10th July 2014)
• Under section 10(23D), units of a mutual fund defined other than equity oriented fund (whether quoted or not, if the transferal of such shares happens on or before 10th July 2014)

In calculating the period date of transfer shall be excluded, and the date of purchase will be included.

Period of Holding In Some Cases

1. Under section 49(1), will be acquired under inheritance, etc. – The period of holding of the previous owner is also included.
2. Right Shares – From the date of allotment of such right shares.
3. Bonus Shares – From the date of allotment of such bonus shares.
4. Sweat Equity Shares/ESOP – Date of allotment of such security.
5. Liquidation of the company – The period subsequent to the company’s date goes into liquidation is excluded.
6. Shares held in the resulting company or amalgamated – The period of holding in amalgamating/demerged company is included.
7. Transfer of security in a Demat account – Period of holding shall be determined on a first-in-first-out basis.

In case the land is possessed by the assessee for more than 36 months, but the building on such land is built for less than 36 months, then there will be short term capital gain on the sale of the building and long term capital gain on the sale of land. Citibank v/s CIT

Suppose the asset is originally not held as a capital asset but is a capital asset at the time of transfer. In that case, the whole period of holding from the date of initial purchase is to be acknowledged.

• Surrendering or Cancelling PAN
• Ownership of PAN Card\
• Surrendering a Duplicate PAN Card Procedure
• Tips on Surrendering a Duplicate or Supplementary PAN Card, as well as Implications

Surrendering or Cancelling PAN

The Income Tax Department issues a Permanent Account Number to each taxpayer in India on the directions of the Central Board of Direct Taxes (CBDT). It’s a ten-digit alphanumeric number that’s required for every financial transaction a person has ever made. Anyone can get a PAN by filling out Form 49A or Form 49 AA. The primary goal of a PAN is to track all of the PAN holder’s taxable financial transactions. A person’s PAN does not change with their address.

Ownership of PAN Card

Anyone eligible to pay taxes in India, including foreign nationals, can register for a PAN. Businesses with a total turnover, sales, or gross receipt of more than 5 lakh in the previous fiscal year must apply for a PAN. PAN numbers are used to pay direct taxes, file tax returns, and avoid excessive tax deductions.

Having more than one PAN card is illegal, according to the Income Tax Act. PAN is also used as an identity card and is extremely vital to Indian citizens. Its uses aren’t restricted to tax and investment planning.

However, it is critical to remember that Indian citizens can only have one PAN card in their name. Having multiple PANs is a criminal offence that can result in legal issues and a fine of 10,000 INR under section 272 B of the Income Tax Act. 1961

Surrendering a Duplicate PAN Card Procedure

Due to repeated applications, some people are given two PAN cards. If individuals have been assigned two PAN cards, they must submit them willingly to prevent any penalties. Individuals have two options for submitting a surrender application:

Online Surrender

1. Individuals holding two PAN cards can go online to the Income Tax Department’s website (http://incometax.sparshindia.com/pan/newPAN.asp) and click on the Surrender Pan button to surrender their PAN cards.
2. Individuals can also locate an “Online Pan Cancellation Form,” which can be filled out and submitted online by anyone who wishes to cancel or surrender their PAN card.
3. The person must provide all pertinent information about the PAN they desire to revoke or surrender.
4. Individuals can also revoke or surrender their PAN cards online using NSDL TIN Facilitation Centers or UTI PAN Centres. They must complete the “Change in PAN data” application form. The individual can insert the details of a spare or duplicate PAN card in the form’s last row.
5. Within a month, the individual will receive confirmation of the Cancellation or Surrender’s acceptance.

Surrendering by Hand

The person must go to the local assessment officer. Individuals can submit personal information and information on the PAN card they wish to surrender through letter or by visiting a local NSDL TIN Facilitation Center or UTI PAN Center. The acknowledgement copy must be kept secure by the individual.

Surrender a Deceased Person’s PAN Card

When a PAN cardholder dies, their relatives must write a letter to the Income Tax Officer of the relevant jurisdiction, stating the reason for surrender (i.e. the holder’s death) and attaching the death certificate.

A few additional facts, such as the name, PAN card number, and date of birth, must also be included in the letter. The procedure for surrendering a PAN card is the same for Indian citizens, NRIs, and foreign nationals.

Tips on Surrendering a Duplicate or Supplementary PAN Card, as well as Implications

1. A person can only have one PAN card, according to Section 139A of the Income Tax Act of 1961. Individuals with more than one PAN card may face penalties, as the government has ordered that PAN and Aadhaar cards be connected. The eligibility for a PAN card is discussed in this section.
2. An income tax officer can levy a penalty of Rs.10,000 on an individual who has more than one PAN card under Section 272B of the Income Tax Act. Individuals with more than one card can deactivate the excess card by going to the NSDL website and filling out the PAN rectification form.
3.  Individuals can also do it offline by submitting a PAN rectification form to the nearest NSDL collection centre, filling out a letter with the jurisdictional Assessing Officer, and paying for it. Individuals will receive an acknowledgement once the form has been completed and payment has been paid.

Conclusion

As a result, an individual mustn’t obtain two PAN numbers or Cards. If a person possesses two numbers, he must relinquish one of them to the Internal Revenue Service to avoid being prosecuted. It’s also crucial to maintain the IT department’s acknowledgement letter. This is useful if the PAN gets corrupted by someone; the acknowledgement copy can save you time and money.