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Is PAN Card mandatory for foreign directors?

As per Companies Act

Yes, PAN Card has become mandatory for foreign directors. It was observed by the Ministry of Corporate Affairs (MCA) that many difficulties were being faced by Foreign Nationals while filing Incorporation form (INC-7). So, as to make the process easy and smooth, a new clause has been introduced.

However, it is now been declared that PAN Card details are mandatory only for those foreign nationals who are required to possess “PAN” in terms of provisions of income Tax Act, 1961 on the date of application for incorporation. Where the intending Director who is a Foreign National is not required to compulsory possess PAN, it will be sufficient for such a director to provide his/her passport number, along with undertaking stating that provision of mandatory applicability of PAN are not applicable to the person concerned. The form of Declaration is to be made by the foreign director which shall be issued by the Competent Authority.

The above mentioned information is as per the General Circular no. 12/2014 presented by the Ministry of Corporate Affairs.

As per Income Tax Act

PAN is a ten-digit alphanumeric code which is issued by the Income Tax Department of India. Every individual residing in India has a unique identity as described in PAN having ten-digit alphanumeric code. PAN is a proof of identity and also a proof of age which is valid all over the country.

PAN CARD is a must-have document that all the taxpayers must have as it helps to track a person’s financing earning. For all the business owners who are running a business also requires to have a PAN Card of their company.

The Finance Act, 2018 made mandatory for all entities entering into financial transaction of an amount aggregating Rs. 2,50,000/- or more in a financial year, with effect from April 1, 2018 to obtain PAN Card. Not only this provision but all the banks already has mandated PAN for opening of bank account of all entities.

All in all, if a person is a director in an Indian Company, no matter he/she is a resident or non-resident, has financial transaction of Rs.2,50,000/- or more will have to obtain PAN Card. Not only the director of an Indian company, but also every person who is a Managing Director, director, partner, trustee, karta, chief executive officer are required to adhere to this clause.

Non-Compliance of obtaining a PAN Card

If any of the foreign directors or any other person fails to comply with the provision of obtaining PAN Card, then the Assessing officer may under Section 272B of the Income Tax Act, levy a penalty of Rs. 10,000/- for such default as PAN card plays an important proof of identification.

Non-Compliance of obtaining a PAN Card

If any of the foreign directors or any other person fails to comply with the provision of obtaining PAN Card, then the Assessing officer may under Section 272B of the Income Tax Act, levy a penalty of Rs. 10,000/- for such default as PAN card plays an important proof of identification.

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