The India Street: Editor Musings about TAN/PAN, Jhunjhunwala, Corruption, Rupee, Politically Incorrect Statement of the Week

The Facts about TAN

I found this on the Labnol blog TAN - Facts you should know which describe why you need a TAN or Tax Deduction and Collection account number (a unique ten digit alpha-numeric number) that is required to be obtained by anyone responsible for deducting or collecting tax. Unlike PAN, the TAN card is used to by persons responsible for collecting or deducting your tax at the source of said collection whereas PAN is to be obtained by the individual to track his/her own taxes.

Most Politically Incorrect Item of the Week

One will never get away with this statement in the US or Europe, and especially if done by a Government organization, which is why I was amused or dismayed to see the following:

“Q3. Who can apply on behalf of minor, lunatic, idiot, mentally retarded, deceased and wards of court? Ans. Section 160 of IT Act, 1961 provides that a minor, lunatic, idiot, mentally retarded, deceased, wards of court and such other persons…..“

I found this statement here - Well, I’m not a politically correct person, but this seems a little harsh considering that it’s coming from a Government organization in India. Especially so when the subject pertains to collecting money from people with the descriptions above.

Is a Strong Rupee Good or Bad for India?

The India Street has written on the Rupee and how we predict the stronger valuation vs. the dollar to continue. FDI is streaming into India at an unprecedented rate. In fact July’s inflow will be over $6 billion. Some attribute the Sensex plunge this week to the RBI’s attempt to moderate the Rupee from strengthening. While a stronger Rupee makes Indian exports more expensive, it also allows Indian companies to set up outside of India at a less expensive rate. It also forces Indian companies to be more competitive and thus more profitable over the long run.

Jhunjhunwala Involved in Tops Security Investment?

For our latest Jhunjhunwala watch for the week, The India Street noticed that ICICI Venture Funds and Indivision picked up nearly a 20% stake in Tops Security. You should know that Rakesh Jhunjhunwala owns 16% in the company. There’s a lot of smart people invested in this company now, one should take notice.

Corruption in India

Retired academic Robert Priddy (Philosophy and Social Sciences, University of Oslo) was the chief of Norway’s Sathya Sai Organization (Wikipedia reference). His article Avoidance of the law in India discusses how difficult it is for those in power or those that have wealth to be brought to justice in India.

When I was growing up, I often tried to understand how the wealthy got wealthy and was brought up to believe it was done through smarts and hard work. It pains me to see some that have achieved wealth did so nefariously or worse, those that have achieved power or wealth are still cheating.

The India Street condones fair play in India and we will use our platform to expose corruption that is hurting investors that play by the rules. We have noticed that there are not a lot of articles or stories in the mainstream press about corruption yet we know it takes place frequently. In fact India has been improving as late in the global rankings, but still stands far behind Western Nations. Corruption has been directly linked to poverty “Corruption traps millions in poverty,” said Transparency International Chair Huguette Labelle. “Despite a decade of progress in establishing anti-corruption laws and regulations, today’s results indicate that much remains to be done before we see meaningful improvements in the lives of the world’s poorest citizens.”

Thus there are even more reasons to expose corruption. By exposing it you embarrass and bring shame to those that knowingly cheat you and me. Maybe they won’t be prosecuted in today’s India, but we see a future where all Indian citizens will be treated equally.

- The Editor

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PAN to check tax evasion in India

By Vipin Agnihotri

Permanent Account Number (PAN) is fast emerging as a tool for Income Tax department in India to check tax evasions. There are many transactions where quoting of PAN has been made mandatory. And number of economic activities requiring mention of the same is expected to go up.

“These transactions have been added over from time to time and there is always a possibility that new activity will be brought in the fold. PAN is a means to make transactions transparent. It has made the work of the department more focused and made easy zeroing in on people in case of discrepancies,” pointed out Anjani Kumar, Income Tax Commissioner in an exclusive interview with The Indian Street.

Quoting of PAN is essential while buying or selling an immovable property with a value pegged at Rs five lakh and more. Same holds true for sale and purchase of vehicles, as defined in Clause 28 of Section 2 of the Motor Vehicles Act. It, however, does not over two wheelers.

Depositing money also needs a PAN be it a time deposit, exceeding Rs 50,000 with a banking company covered under Banking Regulation Act or a deposit of more than Rs 50,000 in post office savings bank. Payment and deposit in cash exceeding Rs 50,000 and contract of more than a lakh rupees for sale or purchase of securities as defined in Securities Contracts (regulation) needs PAN as well.

Besides, opening an account or applying for credit card with a banking company, applying for telephone connection, paying hotel and restaurants’ bills exceeding Rs 25,000 and paying more than Rs 25,000 for foreign travel also necessitates quoting of PAN.

Apart from this, payment of Rs 50,000 or more- to a mutual fund for purchase of its units, to a company for acquiring shares issued by it, to a company or an institution for acquiring debentures or bonds issued by it or to RBI for acquiring bonds issued by it needs mention of PAN.

“If, somehow, a person does not talk of PAN but successfully transacts, he/she has strict punishment under IT act. And we came to know of same through our central information commission that has annual reports from all dealers, contractors and others involved in economic transactions,” added Kumar.

In case a person does not have a taxable income and hence no PAN, there are forms wherein a person can declare the particulars of transaction specified above. Similarly, minors can quote PAN of parents or guardian. For all those indulging in transaction of any sort involving money, there is no escaping PAN; its need is ever increasing. And happily, getting it is not difficult, given one furnishes the required document relevant to one’s identity and proof of residence and deposits a nominal fee.