The Central Board of Direct Taxes (CBDT) specified that non-individuals are mandatorily required to apply for PAN in case they do not possess one by May 31, 2019.
In its notification dated November 19, 2018, the Central Board of Direct Taxes (CBDT) specified that non-individuals are mandatorily required to apply for PAN in case they do not possess one by May 31, 2019.
A penalty can be imposed on for non-compliance, if the non-individual entities do not apply for PAN on or before May 31, 2019. If non-individual entities without a PAN card have conducted financial transactions worth more than Rs 2.5 lakh in the last fiscal year, they will have to apply for PAN before May 31. Those managing financial transactions on behalf of the non-individual entities also need to get PAN before the deadline, or else it can attract a penalty.
Who needs to apply for PAN before the notified deadline?
A person who needs to comply under the section 139A is, “a resident, other than an individual, which enters into a financial transaction of an amount aggregating to Rs.2.5 lakh or more in a financial year; or who is the managing director, director, partner, trustee, author, founder, Karta, chief executive officer, principal officer or office bearer of the person or any person competent to act on behalf of the person.”
Along with the notification issued by the CBDT that clarified that by May 31st, non-individual entity should apply for PAN, the notification further states that individual who is either a director, author, founder, partner, trustee, Karta, chief executive officer, office-bearer or any person competent to act on behalf of non-individual and has made transaction worth Rs 2.5 lakh or more also needs to apply for PAN on before May 31, 2019. Even if the entity is not required to file their income tax return (ITR) as per rules, applying of PAN in these cases is mandatory. A penalty, as high as Rs 10,000, will be imposed on those who fail to comply.
The amendment that came into force by the Finance Act 2018, the CBDT (Central Board of Direct Taxes) on its notification dated December 5th, 2018, set the aforesaid date of 31 May 2019 for the transactions taken place in fiscal 2018-19.
If you do not apply for PAN, what happens?
As per the current income tax laws, the assessing officer can impose a penalty of Rs 10,000 under section 272B of the Act, if a non-individual entity does not apply for PAN on or before the deadline of May 31.