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Sole Proprietorship

Does a Proprietorship Firm Need Its Own PAN?

The Permanent Account Number issued by the Income Tax department helps the government keep track of taxpayers in India. All taxpaying citizens and businesses need to obtain a PAN card to file their IT returns and pay their tax dues. The PAN Card, therefore, acts as a tax identity for individuals in India.

The last date for linking Aadhaar with PAN is 30th June 2023. PAN will become inoperative from 1st July 2023 if it is not linked with Aadhaar.

A Permanent Account Number, better known as PAN, is an important document all taxpayers must possess, as mandated by the Income Tax Act,1961. It serves as the tax identity for any individual or business that generates a taxable income in India. If you run a Proprietorship Firm, the PAN becomes even more significant to you as it is essential to obtain various licenses. If you operate in India, you need to have a PAN, irrespective of whether your business is incorporated in India or abroad. Here’s an in-depth look at the need for a PAN card, and how to apply for one.

What Is the PAN Card?

The Permanent Account Number is a document that the government uses to track taxpayers and prevent tax evasion. Individuals who do not possess a PAN, cannot enjoy several tax benefits offered by the government and might not be able to pay their tax dues on time. If you run a business in India, then owning a PAN card becomes even more integral. Most business registrations and certifications require the owner’s or business’s PAN card for verification. Also, if you do not have a PAN card, the Income Tax Department may suspect you of concealing important information related to your financial transactions.

Is a PAN Card Mandatory for Proprietorship Firms?

Business owners and individuals who have a taxable income must apply for a PAN card as soon as possible. However, if you run a Proprietorship Firm, you are not mandated to apply for a new business or company PAN card. Proprietorship firms do not receive separate PAN cards as they do not have a separate legal existence, unlike a company or firm. Also, since such corporate entities consist of more than one person, taxing everyone involved becomes more complicated, leading to the issue of a company PAN card. Hence, business owners who run proprietorship businesses can use their personal PAN for their firm. Additionally, such individuals can use the same PAN for multiple proprietorship firms they might own.

Documents Required for Registering for a PAN Card

Since proprietorship firms do not have a separate legal existence, business owners can use their PAN cards for official purposes. Individuals must submit the following documents when applying for a PAN card.

  1. Proof of identity: driving license/voter ID/passport/Aadhaar card
  2. Further, proof of date of birth: high school leaving certificate/ pass certificate 
  3. Proof of address: telephone/electricity/water bill/pension payment order/tax receipts/ sale deed

Apply Online for a PAN Card for a Proprietorship Firm

Since the proprietor’s PAN card works as the PAN of the proprietorship firm, the business owners must apply for a PAN themselves. The government has facilitated online PAN card applications through the NSDL website. Individuals must duly fill, sign, and submit Form 49A to apply for a PAN card in India. Individuals must be careful while filling out this form as even small errors can lead to massive delays in processing. The form requires various details, including business category, contact details, and business information. When applying for a proprietorship firm, the business category remains ‘individual’. 

Additionally, after applying for the PAN card online, individuals need to send hard copies of their supporting documents to the NSDL office in Pune. Individuals who wish to pay for the PAN registration through offline means will also have to send a copy of their demand draft to complete the process. All such hard copies must reach the NSDL office at least fifteen days after filing the online application. Following which the office scrutinizes the application and the accompanying documents. 

Get your PAN Card effortlessly. Essential for financial transactions. Verify identity, ensure tax compliance. Simplify your financial processes now!

Why Apply for a PAN Card?

  1. A PAN card is necessary to file Income Tax returns: on time every year and stay compliant.
  2. The PAN card serves as a valid and vital identity proof accepted by all financial institutions.
  3. It provides individuals and businesses with tax deductions on TDS.
  4. A PAN card makes it easier to claim income tax refunds
  5. It is necessary if you wish to start a bank account or Demat account
  6. A PAN is required when selling or buying immovable property worth more than 10 lakhs 
  7. It is necessary for making certain financial transactions and cash payments

How We Can Help

As you can see, there are several key details that individuals need to remember while filling out this form. Additionally, business owners need to submit their digital e-KYC to complete the application form. They will also have to provide details regarding their Accounting Officer Code, which they will need to search for separately. Hence, most small business owners make use of third-party service providers, such as Vakilsearch to ensure smooth filing. Our legal experts collect all the required information from you and file your application on your behalf. As a result, you will not have to worry about delays in processing or inaccurate information on your PAN card. To enjoy a hassle-free experience obtaining a PAN card for your proprietorship firm, reach out to us at Vakilsearch and schedule an appointment at the earliest. 

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