Is PAN Required for Foreign Directors

[Pandiyan Perumal]

Our Indian Company is 100% holding by a foreign company. And there are three directors, out of three directors, one Indian director & Two foreign directors. But those two foreign directors don't have any income in India. Please suggest us, PAN is required for those two foreign directors.

[PRADEEP SHUKLA]

Non-residents: Do they need to have PAN

Non-residents were required to obtain PAN in certain specified cases like to make investment in Mutual Funds in India, to purchase property in India, employment etc. A Non-resident, therefore, having no financial transactions in India, was not required to have PAN.

[YAGAY andSUN]

Every person, whether a resident or non-resident in India, who is a director in an Indian Company that has a financial transaction of ₹ 250,000/- or more, in a financial year, will have to compulsorily obtain Indian PAN Card. This amendment might also help in tracking the shell companies.

[YAGAY andSUN]

Section 139A of The Indian Income Tax Act specifies the list of persons who are required to obtain Permanent Account Number (PAN card) within the prescribed time limits.

Finance Act, 2018 has introduced clause (v) and (vi) to sub-section (1) to Section 139(1) to include the following categories of persons who are also now required to obtain their PAN card.

Every resident, other than individual, which enters into a financial transaction of an amount aggregating to ₹ 250,000/- or more in a financial year.

Every person who is a Managing Director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer of the person referred to in above clause or any person competent to act on behalf of the person referred to in above clause.

This signifies that every person, whether resident or non-resident in India, who is a director in an Indian Company that has financial transaction of ₹ 250,000/- or more in a financial year will have to compulsory obtain Indian PAN card.

[YAGAY andSUN]

Section 272B of The Indian Income Tax Act, impose a penalty of a sum of ₹ 10,000/- for such default.

AI Summary

Foreign Directors in Indian Companies Must Obtain PAN for Major Transactions Under Section 139A; Penalties Apply for Non-Compliance. An Indian company, wholly owned by a foreign entity, has three directors, including one Indian and two foreign directors. The query is whether the foreign directors need a PAN. Responses indicate that non-residents typically require a PAN for specific financial activities in India. However, under Section 139A of the Indian Income Tax Act, any director in an Indian company involved in financial transactions of 250,000 or more annually must obtain a PAN, regardless of residency. Failure to comply can result in a 10,000 penalty under Section 272B of the Act.