Income-Tax Twelfth Amendment Rules, 2018

The Income-tax Twelfth Amendment Rules, 2018 were introduced by the Government of India to ensure that reforms are executed in the PAN card regulations. The amendment, which is being implemented with effect from the 5th of December, 2018, is aimed at tackling the issue of corruption. The present article highlights the changes effected by the newly-framed rules.

What is a PAN?

Permanent Account Number (PAN) formed a part of India’s statutory provisions in the year 1972 with the purpose of creating a distinct identity for each taxpayer in the country. The mechanism for PAN Card generation is now an automated system wherein a unique 10-digit number is assigned to citizens and corporate entities falling under the tax bracket. This number is used to record the pertinent tax information of every person who is assessed to Income Tax.

Significance

PAN card has now emerged as one of the most integral regulations of the country, and its importance is on the rise, on account of the intervention of the various governing regimes. In India, PAN card is considered to be essential for some of the following purposes:

Availing the benefit of additional tax deductions
Filing TDS returns
Availing TRN (Tax Registration Number), which is needed while initiating a business
Claiming income tax refunds
Purchasing a car
Opening a bank account
Making investments
Selling and purchasing immovable property
Making time deposits of more than Rs. 50,000
Making cash payments above Rs. 25,000 for the purpose of international travel
Opening a Demat and trading account
Installation of telephones
Obtaining a credit card

Transactional Limit

According to the Income-tax (Twelfth Amendment) Rules, Entities involved in financial transactions of Rs. 2.5 lakhs or more in a fiscal year are now required to

apply for a PAN Card. An application for this purpose must be filed before the 31st of May of the assessment year on which the transaction occurs. Also, any person associated with such entities as a managing director, director, partner, trustee, author, founder, Karta, chief executive officer, principal officer or office-bearer must apply for the document within the notified time-frame.

Quoting of Father’s Name

The latest rules do not obligate the applicants to quote the name of the father in the PAN application if their mother is a single parent. This annuls the previous directive which forced the applicants to mention the name of the father.

Gross Receipts

The regulations of income-tax earlier mandated the resident entities to avail the document if their total turnover for a financial year exceeds Rs. 5 lakhs. The recent amendment has taken away this clause and necessitates all resident entities to apply for PAN, irrespective of their potential sales/turnover/gross receipts. This requirement has been enacted to facilitate the income-tax department to track financial transactions, broaden the tax base and reduce the instances of tax evasion.

E-KYC Norms for Application

The e-KYC facility can be used by the applicants to auto-upload documents and photos from the Aadhar card during the application process. As an alternative, the taxpayer is allowed to use the standalone e-sign facility which prompts the need for uploading images such as photos, signatures or other supporting documents. Users opting for either of these facilities should have linked their Aadhar with the mobile or e-mail number. These facilities are prohibited for minors and those applicants who are aided by representative assessees.

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Frequently Asked Questions

Common questions about Income Tax Twelfth Amendment Rules 2018.

The Income-tax (Twelfth Amendment) Rules, 2018 were introduced by the Government of India to ensure reforms in the PAN card regulations. The amendment aims to tackle corruption and broaden the tax base by making it mandatory for all entities involved in financial transactions above a certain limit to apply for a PAN card.

A PAN (Permanent Account Number) is a unique 10-digit number assigned to citizens and corporate entities falling under the tax bracket in India. It serves as a distinct identity for each taxpayer and is used to record their pertinent tax information.

A PAN card is considered essential in India for various purposes, including filing tax returns, claiming tax refunds, making investments, opening bank accounts, purchasing immovable properties, obtaining credit cards, and making certain financial transactions above a specified limit.

According to the Income-tax (Twelfth Amendment) Rules, entities involved in financial transactions of Rs. 2.5 lakhs or more in a fiscal year are now required to apply for a PAN card before the 31st of May of the assessment year in which the transaction occurs.

The latest rules do not obligate the applicants to quote the name of the father in the PAN application if their mother is a single parent. This change annuls the previous directive that forced applicants to mention the name of the father.

Previously, resident entities were required to obtain a PAN card only if their total turnover for a financial year exceeded Rs. 5 lakhs. The recent amendment has removed this clause, and now all resident entities are required to apply for a PAN card, regardless of their potential sales, turnover, or gross receipts.

The applicants can use the e-KYC facility to auto-upload documents and photos from their Aadhar card during the application process. Alternatively, they can use the standalone e-sign facility, which requires uploading images such as photos, signatures, or other supporting documents.

Minors and applicants who are aided by representative assessees are not eligible to use the e-KYC or e-sign facilities for PAN card application.

The Income-tax (Twelfth Amendment) Rules, 2018 aim to facilitate the income-tax department in tracking financial transactions, broadening the tax base, and reducing instances of tax evasion by making PAN card mandatory for all entities involved in financial transactions above a certain limit.

PAN card has emerged as one of the most integral regulations in India, and its importance has been on the rise due to the intervention of various governing regimes. It is now considered essential for various financial transactions, investments, and obtaining various services in the country.