Don’t get panned by the Indian taxman

The Indian economy may be continuing to hot up – but there’s now an additional hurdle exporters now face, thanks to the country’s tax authorities. Ignore it and you could not only lose valuable customers but be faced with a hefty bill.

The Indian Income Tax Department has introduced Permanent Tax Numbers (PANS) which are issued to any “person” whose income is subject to tax in India. And “person” doesn’t just means Indian residents but any individuals, businesses or anyone receiving payment from India as a supplier.

The move reflects the determination of Indian tax authorities to track the amount of tax being generated in the country. The upshot of all this is that if your Indian customer cannot supply your PAN number to prove that payment has been legitimately made to another country, the customer could be lumbered with a tax bill of 30 per cent of the value. And this cash would be withheld from you until the tax department has finished its investigations.

The impact on your cash-flow could be serious. And it won’t exactly endear your customer to you either.

Having your own PAN number can avoid these hassles and other delays. It shows you’re professional, understand the Indian market and display a long-term business commitment.

Obtaining a PAN is easy but allow plenty of time. You’ll need to complete a Form 49AA,  obtainable on line You’ll also need to provide a number of supporting documents such as copies of the company's Certificate of Incorporation, Memorandum & Articles of Association, recent bank statements along with signed declarations from a director etc. These may need to be attested by the FCO and legalised by the Indian High Commission.

You can find details of how to complete the application process at: form49A

and documents

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