How can a Foreign Company apply for a PAN Card Number in India?

As per the Indian government rules all foreign companies and organizations, are required to obtain a permanent account number (PAN Number) from the Income Tax Authorities of India. According to what has been specified in section 206AA which was inserted by the Finance (No.2) Act, 2009, it has been clearly stated that all foreign parties whether an individual companies or partnerships or any kind of entity who receive payment from the Indian companies after the period of 1^st April 2010 is expected to get their pan to the Indian party which is remitting that payment.

Need to apply for Company PAN, visit: www.PanCardNri.com/company.html

If the Company PAN Number is by any chance not provided to the Indian party with whom transactions are made then the Indian party is expected to deduct the tax on the foreign payment at the highest value of the rates that are provided below

1.    –     The rate which is specified in the Income Tax Act, 1961

2.      – At the rates in force (rate determined in the Finance Act  or under the double tax treaty)

3.     —    At a rate of 20%

Now there are certain responsibilities of the foreign parties. They are expected to obey certain rules and regulations. The ones that are receiving payments from India must make it a point to apply to the tax authorities for obtaining a PAN and provide all the relevant information to the Indian parties which is supposed to pay. It would be a formal document which would state the fact that the foreign party is registered with the Indian Income Tax Authorities.

The process of applying for pan is not something which can be stated as complicated for that matter. The allotment of PAN would take place normally within a period of 10 days after one file for the application.

There are many required documents needed for a company to get a pan, however if you want to know what documents are needed to apply for a company pan card then you must visit the pan office or take help of a broker/agent. In general, an apostilled copy of the Certificate of Incorporation along with the form of application is required to be submitted for PAN application filing (these documents can also be attested from the Indian embassy). All these necessary documents need to be submitted along with the company pan application form, that can be downloaded from the govt pan website.

Now let us take at the look at the consequences of obtaining a PAN on the part of the foreign party. Under the PAN, all the Indian tax related data of the foreign part shall be registered so that the information is easily accessible to the Indian Tax Authorities in an orderly fashion. This information must be available to them so that they can take further action in cases pertaining to the foreign parties.

According to the law, all the foreign parties that are supposed to receive income from India are expected to file a tax return in India irrespective of the fact whether the tax have been  already paid or not. But this was something that was not being practiced very honestly and the Income Tax Authority of the country was not doing any act of supervising it. But these compliances would be something that can be monitored well if the PAN card is obtained by the party. The foreign companies can’t refuse a situation where they are required to undergo a tax audit if their turnover or the gross receipts exceed a value more than Rs. 60 lakhs for that matter in business and Rs.15 lakhs for professionals. They are expected to comply with reporting requirements and the transfer pricing provisions.

Now let us have a look at the actions that are expected to be taken by professionals or the Indian companies. They are expected to inform all their foreign counterparts about the importance of acquiring a PAN card. In the future contracts with the foreign parties the requirement of obtaining a PAN must be specifically mentioned and explained. Actually the checklist of PAN card application must be read thoroughly to ensure smooth transactions. This would enhance foreign relationships with good companies and foster a healthy growth.