Investment in domestic companies and assets of another country by a foreign investor is called a foreign investment. It is largely seen as a compound for economic growth in the future. Foreign investments can be made by individuals, but are most often pursued by companies and corporations with substantial assets looking to expand their reach.
The Permanent Account Number (PAN) card is issued by the Income-tax Department. Nowadays, it is one of the most important documents. The purpose of issuance of the card is to prevent tax evasion by individuals and entities as it links all financial transactions made by a particular individual or entity. In this way, the Income Tax Department has a detailed record of all major transactions for tax purposes.
Indian citizens who are residents of the country as well as NRI (Non-Resident Indians), OCI (Overseas Citizen of India) cardholders, PIO’s (Person of Indian Origin) as well as foreigners who come under the purview of the Income Tax Act of 1961 are eligible to apply for a PAN card. Companies, governments, firms, and minors too can apply for a PAN card.
The income tax department has revised rules to exempt such entities from obtaining permanent account number (PAN) on a mandatory basis which has come as a relief to non-residents investing in category I and II alternate investment fund (AIF) located in International Financial Services Center (IFSC)
The turn-out for such investors from section 139A of the Income Tax Act is contingent on non-residents not earning income other than from said funds. Additionally, these funds are also required to deduct TDS on such income.
Further, the exempted non-resident investors are also required to furnish declaration containing name, address, country of residence, and tax identification number of the country or specified territory of their residence. Among other conditions, to avail the relaxation, the funds are required to furnish quarterly statements for non-resident investors in the newly notified format.
Sunil Gidwani, partner at Nangia Andersen LLP, said that the demand for exemption has been based on the fact that the fund operating from IFSC would be withholding tax payable by the investors. This would go a long way in making it easy for the fund managers to attract foreign investors in a fund set up in IFSC and would give impetus to IFSC as a fund jurisdiction.
Under section 139 of the Income Tax Act, any person who has received taxable income in the previous financial year must apply for PAN.
