As of April 2010, sales of services without a Permanent Account Number (PAN) are subject to higher taxation. In fact, the Government of India has declared that a higher withholding tax (20% and above) will be withheld on all transactions subject to Tax Deduction at Scource (TDS) for which the taxpayer does not have a PAN.
The new TDS provision was included in the Income Tax Act, 1961 and is effective April 1, 2010. The imposition of penalties against those who do not have PAN had already been announced in Budget 2009-10 and is intended to strengthen the tax department's database and increase fiscal discipline.
It should be kept well in mind that the Is also applicable to all foreign entities providing services in India and, in general, on all payments or remittances of money subject to TDS. For all Italian companies with frequent sales operations in India it is therefore advisable to apply for PAN To avoid very high source retention.
In order to avoid disputes over whether or not to indicate the NAP, it is also stipulated that. both the customer and the supplier must include the supplier's PAN in all correspondence, invoices, vouchers and other documents exchanged between the parties. If the customer fails to comply with these obligations, he will have to withhold a TDS higher than the normal deduction percentage.
For more information on how to obtain your PAN number, you can send an e-mail to the following address. [email protected].
Octagona, a consulting firm in international business with offices in Carpi (MO) and New Delhi (India), specializes in providing services that enable Italian companies to start or develop their internationalization process in the Indian market and SAARC area.
Source: The Indian Express
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Payments subject to TDS (Tax Deduction at Source) are subject to a higher withholding tax, equal to 20% or more, compared to the standard rate. The rule applies since April 1, 2010 and also affects foreign suppliers without a Permanent Account Number, reducing the amount actually collected.
The PAN, Permanent Account Number, is the tax identification number used by the Indian tax department. It is required by foreign companies because, if missing, a higher withholding tax applies to transactions subject to TDS. Having it allows you to avoid high withholding taxes and operate more fiscally regularly.
The higher rate applies from April 1, 2010. The provision was included in the Income Tax Act, 1961, the Indian income tax law. It was already announced in the 2009-10 Budget with the aim of strengthening the tax department’s database and increasing tax discipline.
Yes, the rule applies to foreign entities providing services in India and, in general, to all payments or remittances of money subject to TDS. Italian companies with frequent sales operations in the country are therefore involved and should apply for a PAN.
The supplier’s PAN must be provided by the customer and the supplier in all correspondence, invoices, vouchers and other documents exchanged between the parties. The purpose is to avoid disputes. If the customer fails to comply with these obligations, they must withhold a TDS exceeding the normal deduction percentage.
An Italian company can request information about the procedure for obtaining the PAN by writing to [email protected]. Octagona is a consulting company with offices in Carpi (MO) and New Delhi, specializing in supporting Italian companies in internationalization in the Indian market and in the SAARC area.
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