Mandatory PAN Requirement u/s 139A of Income Tax Act 1961

Corporate India Blog - Mandatory PAN Requirement under section 139A of Income Tax Act 1961

Today in our quick read blog (No. 02/2020-21), we have presented an outlook on amendment to Section 139A of the Income Tax Act (as amended vide the Finance Act 2018).

Vide this amendment, directors (including Managing Director), partner, trustee, author, founder, karta, chief executive officer (CEO), principal officer, officer bearer of company or firm and any other person competent to act on behalf of company or the firm, are required to obtain Permanent Account Number (PAN) on or before the 31st day of May immediately following the financial year in which the applicant enters into financial transaction of more than INR 250,000.

In light of the above changes, the obligation to obtain PAN is not only restricted to Directors, but is even extended as a mandatory requirement to the following class of person(s):

  1. Founder of company/firm
  2. Chief Executive Officer
  3. Principal Officer / Officer bearer
  4. Any person competent to act on behalf of the company/firm

While other categories sound reasonable, category in point 4 above is a broad one, giving enough leverage to department to catch hold of any person who acts on behalf of company/firm in any manner, triggering the above-mentioned financial limit. Companies/firms which involve foreign nationals for project to project basis or for key deputations or for limited time directorships shall have to obtain PAN for each such person now.

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