Foreign entities seek relief from furnishing hard copies for PAN

Mumbai: Global custodians and representatives of foreign entities, including private equity and venture capital firms and corporates, have approached the tax department seeking relief from submission of physical documents.

Through official emails to the Central Board of Direct Taxes (CBDT), several representatives have requested CBDT to allow scanned copies and emails to be accepted as documentation for Permanent Account Number (PAN) card, said people privy to the development.

The move comes as several new PAN applications are stuck. Industry estimates suggest there are around 400-500 such applications pending. PAN card is mandatory for any foreign entity that seeks to do business in India.

Market participants say that while most of the tax processes such as filing and returns are completely online, the same is not the case for PAN applications of non-residents.

“Business continuity is a key parameter determining ease of doing business and bottlenecks like these could impact the image,” said a tax lawyer. “Most of the other regulators, including Sebi (the Securities and Exchange Board of India), have said that it is alright to submit scanned documents. We have requested CBDT as well.”

Filing for PAN card needs documents like notary, stamp papers and apostille, and in the times of lockdown, procuring them has become difficult. Instead, the foreign entities are willing to send the documents scanned and self-certified. “As and when the situations ease, we will provide the physical documents,” said one of the representations.

“It would be difficult for foreign entities (other than FPIs) to obtain PAN in the absence of apostilled documents,” said Rajesh Gandhi, partner, Deloitte India. “It would be useful if a temporary relaxation can be given until June 30 by relying on scanned and self-certified documents — similar to what has been done by Sebi.”

Some foreign portfolio investors are also affected. The government had introduced a new application form for FPIs called Common Application Form (CAF), which is a single form for both Sebi licence and PAN card. The form was optional until March 31 and becomes mandatory from April 1. CAF provides for online PAN, but the old forms don’t. Hence, in cases where the application has been processed via old forms, FPIs would find it difficult to get a PAN card.

“At least 20% of the ongoing registrations have been done through the old forms and their PAN applications are stuck for over a month now,” said a senior official at a global bank.