Business between India and the rest of the world has increased exponentially in the last few years and India’s emerging economy presents a big opportunity for investing and running a business there. For any non-resident individual and organisation earning a taxable income in India, having a PAN card is mandatory.
What is a PAN?
The Permanent Account Number (PAN) is a unique, 10-digit alphanumeric number issued in the form of a laminated card by the Income Tax (IT) Department, which is compulsory for filing income tax returns in India.
A PAN card contains a permanent account number, name, father's name, date of birth, photo, Government hologram and signature.
Is it compulsory to have a PAN?
Not only Indian citizens but also non-resident, foreign citizens and international organizations are required to have a PAN if they wish to carry out any kind of financial transaction in India. Hence, if you want to join a company or start your own business in India, you need to be familiar with PAN.
A PAN card is required for all financial transactions; if you want to open a bank account or a demat account (an electronic listing of shares), get a loan, invest in real estate or other kinds of financial assets, make stock investment, get foreign remittance from abroad, etc., you will find it difficult to proceed without a PAN card.
If you do not have a PAN, you will be at a severe disadvantage:
Not having a PAN will potentially make you liable to pay tax without being able to avail the benefits of various exemptions. It means, for example, that you cannot take advantage of the DTAA (Double Tax Avoidance Agreement) and you could pay tax in both India and your home country.
The Indian tax authorities are taking a hard line with foreign investors with no PAN if they want to avail the advantage of a lower withholding tax in India. And it can directly affect your profitability if you continue to trade without one.
What is a DTAA?
Double Taxation Avoidance Agreement (DTAA) is an agreement between two countries which aims to eliminate or avoid double taxation of the same income in two countries.
India has entered into DTAA (also known as tax treaty agreement) with over 80 countries that provides relief from the double taxation in respect of incomes and thus encourages economic relations and trade.
If you’re not sure how to apply for a PAN card in India or would like further assistance with completing your application, reducing your tax rates or claiming back your withholding taxes, QX Corporate Advisors will be pleased to help you.
Please contact Ravi Kurani on +44 845 838 2672 or email email@example.com to discuss further.