What Does India’s PAN Card Mean To Investors?
What Does India’s PAN card (Permanent Account Number Card) Mean To Investors?
The Indian government has had enough with black money and tax evasion. In less than one year, the Indian government has implemented some of the most drastic financial reforms of the 21st century by any country. It all started with the demonetization of its currency followed by the directives that all wages in the country be made available through bank accounts. And now the government has set the deadline for the PAN (Permanent Account Number) Card application and Form 60 update for all Indian bank account holders as the end of February 2017.
Significance of the move
What does this mean? It implies that every bank account holder in the country must apply for a PAN Card or fill up the Form-60 if they wish to access their finances after the set deadline. Account holders with substantial balances are primarily the most affected as they will be denied access to their given accounts without the PAN card. The card will be required for significant transactions that currently stand at Rs 50,000 for most banks.
Who can have the PAN card?
Whether you need the PAN card or not will in most cases be determined by the nature of your business and personal financial standing. In effect, if you regularly deal with or move more than Rs 50,000 at a time often, it is only safe that you have a PAN card. Otherwise, you will be subjected to the rather tedious process of filling up Form-60 and furnishing your bank with supporting documents every time you wish to conduct a financial move.
Nonetheless, this new directive won’t affect holders of the Basic Savings Bank Deposit Accounts (BSBDA), which are primarily zero balance savings accounts.
Effect to foreign investments
Are you a foreign investor with a local Indian bank account or wish to open one in the near future and aren’t sure if you need the PAN card? Understand that this new directive isn’t discriminative and affects all bank account holders in India whether local or international. Nonetheless, have a better look at the kind of business you wish to conduct and if it falls among either of these categories, apply for your PAN card or be ready to fill the Form-60:
· Sale or purchase of fixed assets worth more than Rs. 5 Lakh.
· Sale and purchase of motorized vehicles, safe for two-wheelers.
· Any securities sale or purchase contract exceeding Rs. 10 Lakh.
· Opening a bank account in India.
· Payment of one-off hotel and accommodation bills exceeding Rs 25,000.
It is important to note that your currently running Indian bank account is already under scrutiny for tax evasion if you recorded transactions exceeding Rs. 50,000 within the last two months of 2016. And according to the directive, the review will primarily cover the six months before the national currency demonetization.
Therefore, it is a high time to consider applying for the card if you already have an Indian bank account. The same applies to foreign investors paying their Indian employees in line with the national directive that all wages go through the banking system. So should expatriates remitting money back home to relatives or investing in property or securities.