Permanent Account Number or PAN is an important identity using which tax department routes the various financial transactions that are carried out by individuals or companies.
Post the announcement of Union Budget 2019, some of the PAN related changes that you should be knowing are included here:
1. PAN to be made invalid if not linked to aadhaar: In accordance with section 139AA (2), the PAN allotted will be considered as invalid in case the person fails to give his or her aadhaar number. But in the future course of time, the card will still be made operative if the person fails to intimate aadhaar or link the two IDs. The last date to link PAN with Aadhaar is September 30, 2019. Further, in the Budget 2019 speech, the operative term has been proposed to be replaced with inoperative from September 1, 2019.
2. Deduct TDS when hiring a professional for personal use: In the current situation, there is no TDS implication on a professional who has been hired to provide some service on an individual level. But henceforth a TDS has to be deducted and deposited with the government quoting the PAN of such professional. This is included as part of new section 194M and has to be charged at the rate of 5% if the payment amount exceeds Rs. 50 lakh on a yearly basis.
Also, to reduce the compliance burden in this regard, it has been allowed to make such a deduction and deposit quoting the individual's and the party's PAN to whom the payment is being made, foregoing the need to obtain a TAN.
3. For some prescribed transaction, providing PAN is a must: Budget 2019 proposed to insert a new clause (vii) in section 139A (1) so as to provide that every person, who intends to enter into certain prescribed transactions and has not been alloted a PAN, shall also apply for allotment of a PAN.
4. Interchangeability of PAN and Aadhaar: These two IDs can be used interchangeably after the parliament passes the approval. And post this while you may be able to quote Aadhaar for carrying out transactions where PAN is a must, the department suo moto will issue you a PAN.