Q-5. What is the rate of Surcharge on Income tax?
Ans. There will be no surcharge on income-tax payments by individual taxpayers during financial year 2009-10 (assessment year 2010-11).
Q-6. . What Is PAN?
Anse. Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by th Income Tax Department, to any "person" who applies for it or to whom the department allots the number without an application.
PAN enables the department to link all transactions of the "person" with the department. These transactions include tax payments, TDS/TCS credits, returns of income/wealth/gift/FBT, specified transactions, correspondence, and so on. PAN, thus, acts as an identifier for the "person" with the tax department.
PAN was introduced to facilitates linking of various documents, including payment of taxes, assessment, tax demand, tax arrears etc. relating to an assessee, to facilitate easy retrieval of information and to facilitate matching of information relating to investment, raising of loans and other business activities of taxpayers collected through various sources, both internal as well as external, for detecting and combating tax evasion and widening of tax base.
A typical PAN is AFZPK7190K.
First three characters i.e. "AFZ" in the above PAN are alphabetic series running from AAA to ZZZ
Fourth character of PAN i.e. "P" in the above PAN represents the status of the PAN holder. "P" stands for Individual, "F" stands for Firm, "C" stands for Company, "H" stands for HUF, "A" stands for AOP, "T" stands for TRUST etc.
Fifth character i.e. "K" in the above PAN represents first character of the PAN holder's last name/surname.
Next four characters i.e. "7190" in the above PAN are sequential number running from 0001 to 9999.
Last character i.e. "K" in the above PAN is an alphabetic check digit.
Q-7. Why Is It Necessary To Have PAN?
Ans. It is mandatory to quote PAN on return of income, all correspondence with any income tax authority. From 1 January 2005 it will be mandatory to quote PAN on challans for any payments due to Income Tax Department.
It is also compulsory to quote PAN in all documents pertaining to the following financial transactions :-
1. sale or purchase of any immovable property valued at five lakh rupees or more;
2. sale or purchase of a motor vehicle or vehicle, [the sale or purchase of a motor vehicle or vehicle does not include two wheeled vehicles, inclusive of any detachable side-car having an extra wheel, attached to the motor vehicle;]
3. a time deposit, exceeding fifty thousand rupees, with a banking company ;
4. a deposit, exceeding fifty thousand rupees, in any account with Post Office Savings Bank;
5. a contract of a value exceeding one lakh rupees for sale or purchase of securities;
6. opening a bank account;
7. making an application for installation of a telephone connection (including a cellular telephone connection);
8. payment to hotels and restaurants against their bills for an amount exceeding twenty-five thousand rupees at any one time ;
9. payment in cash for purchase of bank drafts or pay orders or banker's cheques for an amount aggregating fifty thousand rupees or more during any one day;
10. Deposit in cash aggregating fifty thousand rupees or more with a bank during any one day;
11. payment in cash in connection with travel to any foreign country of an amount exceeding twenty-five thousand rupees at any one time.
Q-8. Is it compulsory to quote PAN on return of income?
Ans. Yes, it is compulsory to quote PAN on return of income. A penalty of Rs.10,000/-
is leviable in case of any default.
Q-9. Who must have a PAN?
Ans. The following persons must have a PAN
1. All existing assesses or taxpayers or persons who are required to furnish a return of income, even on behalf of others, must obtain PAN.
2. Any person carrying on any business or profession whose total sales, turnover or gross receipts are or is likely to exceed five
lakh rupees in any previous year;
3. Any person, who intends to enter into financial transaction where quoting PAN is mandatory, must also obtain PAN.
4. The Assessing Officer may allot PAN to any person either on his own or on a specific request from such person.
Q-10. Can a person obtain or use more than one PAN?
Ans. Obtaining or possessing more than one PAN is against the law, for which penalty of
Rs.10,000/- may be imposed.
Q-11. . Where to apply for PAN?
Ans. In order to improve PAN related services, the Income Tax department has authorized
UTI Investor Services Ltd (UTIISL) to set up and manage IT PAN Service Centers
in all cities or towns where there is an Income Tax office and National Securities
Depository Limited (NSDL) to dispense PAN services from TIN Facilitation
Centers. For convenience of PAN applicants in big cities, UTIISL has set up more
than one IT PAN Service Center and likewise there are more than one TIN
Q-12. Can an application for PAN be made through Internet?
Ans. Yes, application for fresh allotment of PAN can be made through Internet. Further,
requests for changes or correction in PAN data or request for reprint of PAN card
for an existing PAN) may also be made through Internet. Online application can be
made either through the portal of NSDL (https://tin.tin.nsdl.com/pan/index.html ) or
portal of UTITSL (http://www.utitsl.co.in/utitsl/uti/newapp/new-pan-application.jsp
). The charges for applying for PAN online are the same i.e. Rs. 94 (including service
tax) for Indian communication address and Rs.744 (including service tax) for foreign
communication address, i.e. there are no additional charges. Payment of application
fee can be made through credit/debit card or net-banking. Once the application and
payment is accepted, the applicant is required to send the supporting documents through
courier/post to NSDL/UTITSL.
Q-13. Which documents will serve as proof of 'Identity' in case of Individual applicants,
including minors and HUF applicants?
Ans. Copy of school leaving certificate or matriculation certificate or degree of a recognized
educational institution or depository account or credit card or bank account or water bill
or ration card or property tax assessment order or passport or voter identity card or
driving license or certificate of identity signed by a MP or an MLA or a Municipal
Councilor or a Gazetted Officer;
In case the PAN applicant is a minor, any of above documents of any of the parents or
Guardian of such minor shall serve as proof of Identity;
Q-14. What is proof of 'Address' for Individual applicants, including minors and HUF
Ans. Copy of electricity bill or telephone bill or depository account or credit card or bank
account or ration card or employer certificate or passport or voter identity card or
property tax assessment order or driving license or rent receipt or certificate of address
signed by a MP/ MLA/Municipal Councilor / a Gazetted Officer;
In case the PAN applicant is a minor, any of above documents of any of the parents or
guardian of such minor shall serve as proof of Address;
In case PAN application is made on behalf of a HUF, any of above documents in respect
of Karta of the HUF will serve as proof of Address.
Q-15. Do we need to apply for a another PAN when we move or transfer from one city to
Ans. Permanent Account Number (PAN), as the name suggests, is a permanent number and
does not change during lifetime of PAN holder. Changing the address or city, though, may
change the Assessing Officer. Such changes must, therefore, be intimated to nearest IT
PAN Service Center or TIN Facilitation Center for required correction in PAN databases
of the Income Tax department. These requests will have to be made in a form for 'Request
For New PAN Card Or/ And Changes In PAN Data'
Q-16 What is TAN?
Ans. TAN or Tax Deduction and Collection Account Number is a 10 digit alpha numeric
number required to be obtained by all persons who are responsible for deducting or
collecting tax. It is compulsory to quote TAN in TDS/TCS return (including any e-
TDS/TCS return), any TDS/TCS payment challan and TDS/TCS certificates.
Q-17. Why to apply for TAN?
Ans. The provisions of section 203A of the Income-tax Act require all persons who deduct or
collect tax at source to apply for the allotment of a TAN. The section also makes it
mandatory for TAN to be quoted in all TDS/TCS returns, all TDS/TCS payment
challans and all TDS/TCS certificates to be issued. Failure to apply for TAN or comply
with any of the other provisions of the section attracts a penalty of Rs. 10,000/-.
Q-18. Why is it necessary to have TAN?
Ans. TAN is required to be quoted in all TDS/TCS returns, all TDS/TCS payment
challans and all TDS/TCS certificates to be issued. TDS/TCS returns will not be
received if TAN is not quoted and challans for TDS/TCS payments will not be
accepted by banks. Failure to apply for TAN or not quoting the same in the
specified documents attracts a penalty of Rs. 10,000/-
Q-19. How to apply for TAN?
Ans. An application for allotment of TAN is to be filed in Form 49B and submitted at
any of the TIN Facilitation Centres meant for receipt of e-TDS returns. Addresses
of the TIN FC are available at www.incometaxindia.gov.in or http://tin.nsdl.com.
Q-20 Is it necessary to apply for different TAN if a deductor has to deduct tax from
different types of payments like salary, interest, dividend etc.?
Ans. No. TAN once allotted can be used for all type of deductions. It can also be used
in case tax is being collected at source also
Q-21. How can I apply for a Company Name?
Ans. File eForm1 A by logging in the portal along with a payment of fees of Rs.500/-
and attaching the digital signature of the applicant proposing to incorporate the
company. If proposed name is not available apply for a fresh name on the same
Q-22 what is the minimum number of directors required for forming a company?
Ans. Minimum no. of directors for Private Limited Company: Two, for Public Limited
Company: Three and, for producer company: Five.
Q-23. What is the minimum number of subscribers required for registration of a
Ans. Minimum no. of subscribers for Private Limited Company: Two, for Public Limited
Company: Seven and for Producer company: Ten.
Q-24. What is the minimum Paid-up Capital at the time of registration of a company?
Ans. The minimum paid up capital for Private Limited Company: Rs.1,00,000/- For Public
Limited Company: Rs.5,00,000/- This limit is not applicable to company having licence
under section 25.
Q-25 What are the documents to be filed with RoC every year?
Ans. Invariably, the Balance Sheet and Annual Return have to be filed every year. Other
documents such as, Return of Allotment (Form-2), Change of Registered office (Form-
18), Change among the Directors (Form-32), Charges (Form-8, 10, 17, 13)etc., have to
be filed within the due date from the events taking place in the company as per the
Companies Act, 1956.
Q-26 What is Form 26AS?
Ans. Form 26AS is a consolidated tax statement issued under Rule 31 AB of Income Tax
Rules to PAN holders. This statement, with respect to a financial year, will include
a) tax deducted at source (TDS);
b) tax collected at source (TCS); and
c) advance tax/self assessment tax/regular assessment tax etc., deposited in the bank by the taxpayers (PAN holders).
Form 26AS will be prepared only with respect to Financial Year 05-06 onwards.
d) Paid refund received during the financial year.
Q-27 What happens if I have not given my PAN in the tax payment challan used for
depositing my advance/self assessment tax?
Ans. In such cases, the tax payment details will not be posted in Form 26AS. Therefore, it is
important for you to correctly state your PAN in your tax payment challans.
Q-28 Are all receipts considered as income?
Ans. No. Receipts can be classified into two kinds. A) Revenue receipt B) Capital receipt.
The general rule under the Income tax Act is that, all revenue receipt are taxable unless a receipt is specifically exempted and all capital receipts are exempt from taxation unless there is a provision to tax it. Gifts and loans etc are in the nature of capital receipts not attracting tax.
Q-29 Do I have to maintain any records or proof of earnings?
Ans. For every source of income you have to maintain proof of earning and the records
specified under the IT Act. In case, no such records have been laid down, you should
maintain reasonable level of records with which you can support the claim of income.
Q-30 What are the rates of Income tax for the A.Y 2009-2010?