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A lot of companies having no presence or office in India are being asked for PAN card numbers from India these days. The Income Tax Department of India introduced a protocol on April 1st 2010 that all international companies that wish to do business, receive remittances, sell products & services and get invoices paid need to furnish an Indian PAN number in the name of their company. In absence of a PAN, they have to pay much higher withholding tax rate; which at times could be over 30% on their total invoiced payment. Thus it’s very important that a foreign company which intends to do business in India must register for a PAN (Permanent account number), to avoid excessive deductions on the remittances withheld.[1]
The PAN card is issued by the income tax department of the government of India. It allots a unique ten digit alphanumeric code known as PAN – permanent account number to each company which cannot be changed or given to anyone else. The PAN is compulsory to carry out any major financial transactions in India. These include all trading activities. The purpose of the PAN is to estimate the approximate revenue generated by an international company in the country and decide upon a rate of taxation (withholding).[2]So, PAN is necessary for all companies, be it LLP, LLC, Partnership firm, Limited, Corporations, Incorporations, Charities or Trusts and other organizations; in order to carry on their financial activities; even if such a firm does not have any presence, office or branch in India. This is true for both indigenous and foreign companies. If any international company wishes to engage in trade in India, receive payments on time without higher tax deduction then must obtain a PAN. Since 2008, the process of obtaining PAN by foreign companies has been largely simplified. [3]
Steps
Be aware that the foreign company can opt for a facilitator (PAN agent), which might cost some extra money; but it’s for sure that such an authorized agent will make the Government PAN process lot simpler and get the job done quickly. On the other hand a company can make a direct application using the NSDL tax information network or the UTI PAN department; however the process could be a little perplexing for international firms.[4]
Thoroughly familiarize oneself with the guideline for company application for PAN before you start the process.[5]Advertisement
Make the application using form 49A. This can be downloaded from the internet or obtained from any reliable PAN broker website. One such authorized broker is: http://www.PanCardNri.com[6]
Send the Government 2 supporting documents along with a company PAN form as an identity and address proof.
Make sure your ID Proof is an APOSTILLED copy of the certificate of incorporation or Business registration certificate or Articles of incorporation is necessary as an identity proof for the firm. This certificate must include a few details.
Make sure your Address proof is an APOSTILLED copy of the bank statement showing company name and current communication address where the card would be delivered. This could contain the full registered address of the company.
Know that if you do not have any of the above required documents then you may obtain them from the concerned authority in the country where your company was incorporated or registered initially.
Know that the copies of the above documents can be sent in the UK to the Legalization Office of the Foreign and Commonwealth Office (FCO) and Secretary of state office in the USA for apostille. If your firm is registered in any other country then you can get more information about how to get the documents apostilled from the broker through which you are getting the application processed. In general an apostille is valid in a country that participated in the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents. If the concerned country has signed this pact, no authorization will be needed because India is a party to this convention.
Have a bank draft. This is like a cheque but must be obtained to pay Income Tax Department. At present the company PAN fee is Rs.964. If you have trouble getting a demand draft made, then you may take help of an agent.
Ask for a foreign currency draft. The fee has to be paid in Indian rupees (INR). The draft should be drawn in favor of NSDL – PAN or UTITSL and it has to be payable at Mumbai.
Remember that though the draft itself may not be a very big amount, the bank charges often exceed the face value of the draft and these bank charges will have to be borne by you.
Provide the details of the bank draft like issuing bank, date of issue, demand draft number etc. All these information are obtained from the draft itself.
Leave the name and other details of the Assessing Officer blank. The default AO code is optional.
Download and print the webpage which contains your PAN card application number and sign it. This number will help you track the status of your application.
Send the three documents to your respective PAN agent/broker or directly to the NSDL/NSDL processing center in India. You can obtain the exact address from the website or the broker.
Wait for the Government to issue your firm a PAN number and the actual physical PAN card will be couriered to your foreign address in about five weeks.Advertisement
Expert Q&A
Video
Tips
- For more information, please don't hesitate to call the customer care unit of the PAN department.Thanks
- Help of an agent can be taken if the process seems to be difficult.Thanks
Warnings
- The bank draft should be made in Indian rupee.Thanks
- Application form should be signed by the CEO or the authorized signatory for the firm.Thanks
- The form should be filled with a black pen.Thanks
References
- ↑ https://www.incometaxindia.gov.in/_layouts/15/dit/Pages/viewer.aspx?path=/Documents/about-pan.htm&grp=&searchFilter=&k=&IsDlg=0
- ↑ https://www.bankbazaar.com/pan-card/pan-card-for-company.html
- ↑ https://www.bankbazaar.com/pan-card/pan-card-for-company.html
- ↑ https://www.goodreturns.in/nsdl-pan-card-pancid13.html
- ↑ https://economictimes.indiatimes.com/wealth/tax/itr-filing-faqs-heres-what-to-do-if-you-dont-have-pan-of-unlisted-company/articleshow/70599931.cms
- ↑ https://www.incometaxindia.gov.in/_layouts/15/dit/Pages/viewer.aspx?path=/Documents/about-pan.htm&grp=&searchFilter=&k=&IsDlg=0
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