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Income Tax (Twelfth Amendment) Rules, 2018


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.


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.