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.
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.
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.