On Monday, the Central Board of Direct Taxes (CBDT) announced the Income Tax Rules 2020 regarding FORM No. 49BA and non-furnishing of PAN by non-resident. The CBDT made this declaration in the view of the amendment of Income-tax Rules, 1962.
Rule 37BC – The section 206AA
As per rule 37BC – The section 206AA provisions will not remain active in the state when the payments are disbursed to a non-resident. If the section 139A provisions do not apply to non-resident as per rule 114AAB, sub-rule (3) will be incorporated. Section 139A clearly states that the person who fails to avail PAN number must confront the Assessing Officer for the allotment of the same.
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Applicability on Non-Resident
However, as per Rule 114AAB, “section 139A would not be applicable to a non-resident who has made an investment in a specific fund in the previous year. The rule further adds that non-residents cannot claim any income in the country other than investment-related income made in the preceding years.
In addition to that, any income tax due on the non-resident’s income has been deducted specified fund at the rate specified in section 194LBB. Lastly, the non-resident must provide details such as email id, phone number, and address of the permanent resident, a declaration stating resident details, TIN, and a unique number for the identification purpose. All the information should be furnished in the context of a specified fund.
Quarterly statement of the fiscal year
“The specified fund must reflect the quarterly statement of the fiscal year involving the information related to clause (iii) of sub-rule (1) in form No.49BA. The applicant needs to forward this info electronically to Principal Director General of Income-tax (Systems) or the Director-General of Income-tax (Systems) along with the declaration related to sub-clause (c) of clause (iii) of sub-rule (1) within two weeks from the end of a quarter of the fiscal year. The information incorporated in this form should not deviates from the procedures and format prescribed by the Principal Director General of Income-tax (Systems) or the Director-General of Income-tax (Systems) as per Section 3.
Conclusion
The CBDT announcement regarding non-furnishing of PAN by non-resident fills the gap that was created by the non-resident w.r.t non-compliance with the tax authorities. The decision might give better control to the authority to track down the defaulters with ease. Making PAN compulsory for non-resident would definitely help the authority to maintain the integrity of the tax system. CorpBiz shall be happy to serve you in case of any need.
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