Export to India: Basic Guide on PAN 

When talking about exports to India, it is essential to deal with the tax and regulatory regulations that govern the country. To make the most of the opportunities offered by this market, it is necessary to carefully plan the entry strategy and deepen the regulatory and tax aspects that characterize the local context.

Among the key elements to consider for companies wishing to sell in India there is the Permanent Account Number (PAN), a 10-character alphanumeric unique identification code, mandatory for all taxpayers as per the Income Tax Department of India. PAN helps to track all the tax activities of individuals and businesses.

Understand the importance of PAN, knowing who is required to obtain it, and knowing how to apply are essential steps to comply with Indian tax regulations. Careful planning and focused attention to these regulatory aspects are essential to successfully enter this ever-growing market.

Permanent Account Number (PAN): what it is, who needs it, how to request it

PAN is used by tax authorities to track business transactions, ensuring greater transparency and tax compliance.

Although it is not mandatory for companies that do exports to India, obtaining a PAN is highly recommended. Without this registration, Indian customers are legally required to retain the 20% of the TDS (Tax Deducted at Source) on the invoiced amounts, transferring to the foreign supplier only 80% of the invoice value. With a registered PAN instead, TDS rate drops to 10%, allowing exporters to receive a higher net amount.

This regulation also applies to foreign suppliers of services in the country and to all transactions subject to TDS. For Italian companies operating regularly in India, therefore, request PAN is essential to avoid high tax withholdings and optimize your operations.

Furthermore, to avoid disputes, the supplier's PAN must be reported on all official documents, such as invoices, vouchers and communications. In the absence of this information, the customer will be obliged to apply a higher TDS withholding than the norm.

Main features of the PAN

The Pan exists in both physical (PAN card) and digital format. AND It is important to underline that: 

• It contains personal information such as name, date of birth and address, as registered with the Income Tax Department.
• It is linked to all relevant tax activities, such as tax returns, taxes paid and tax credits.
• It is mandatory for several operations, including opening bank accounts, purchasing real estate or financial investments above certain thresholds.
• It is used to ensure compliance with tax regulations and simplify the monitoring of financial transactions.

The PAN is essential for anyone who perceives taxable income or carry out significant financial transactions. It is, in essence, the main link between an individual or a company and the Indian tax system.

Who needs to have PAN in India?

The PAN, therefore fundamental for companies interested in undertaking a path of exports to India,It is mandatory in the following cases:

Natural persons

• Residents and non-residents who earn income subject to tax.
• Employees belonging to taxable income brackets.
• Investors involved in significant financial transactions, such as purchasing mutual funds or real estate.
• Individuals who open bank accounts or make deposits in excess of the limits set by law.

Institutions and companies

• Companies, partnerships, trusts, NGOs and other entities registered in India.
• Foreign companies who conduct business or engage in taxable transactions in India.

Export to India: How to request the PAN?

Per ottenere il Permanent Account Number è possibile seguire diverse modalità, ognuna delle quali implica l’inoltro della domanda presso canali specializzati. 

In Octagona, siamo in grado di supportarti in tutti i passaggi necessari per l’ottenimento di questo requisito importante. Contattaci per ottenere una consulenza personalizzata.

Octagona, with over twenty years of experience in theinternationalization of companies, offers complete support to companies that wish to start exporting to the country, placing at their service its in-depth knowledge of Certifications and local regulations. With our expertise in the Indian tax system, we can help you simplify the necessary operations, and to facilitate effective and profitable penetration into this rapidly growing market. Contact us for any information.