The tax department of India has made PAN (Permanent Account Number) compulsory for all individuals who pay service taxes and central excise duty. This is being done in order to move to the brand new goods and service tax (GST) system smoothly.
What is PAN?
PAN is a unique code that serves as a proof of identity for the citizens of India who make income tax payments. The issue of this card is supervised by the Central Board for Direct Taxes (CBDT) and is offered by the Income Tax Department. It comprises 10 characters consisting of letters from the alphabet and numerals. It is provided to every person who is recognised by the Income Tax Department of India. The first 5 characters of the PAN has letters from the alphabet and the next 4 characters are numerals and the last one is a letter.
It is helpful and compulsory for filing your Income Tax returns, for tax deduction at source, and for any other operations associated with the Income Tax Department.
What is GST?
GST is a form of an indirect tax that intends to replace every tax imposed by the central as well as state governments. It is being introduced in order to reorganise the system of indirect taxation in India. The tax rate under this new tax system will be very less or even nil. The GST will combine multiple indirect taxes such as services tax, surcharges, central excise duty, additional customs duty, and state-level value added tax. Some of the taxes that will be consolidated by the GST are food tax, luxury tax, service tax, value added tax (VAT), entry tax, corruption tax, purchase tax, advertisement taxes, etc.
Migration to GST regime
With the new tax system from the month of April, the Central Board of Excise and Customs (CBEC) has started the procedure to move taxpayers to the new GST system by giving them a certificate of registration which is temporary. This temporary registration number will be given to anyone who has a valid PAN or who is registered under the former tax laws.
If any excise or service tax assessee does not have a PAN, then he or she will have to get a valid PAN and modify his or her information on the ACES portal. This will need to be done before the assessee is moved to the new GST system.
The CBEC is also conducting special programmes to bring awareness among people about the movement of taxpayers and assessees to the GST system.
GST launching process Using Pan
Let us take a look at the steps for the the GST migration process:
- A temporary registration number, known as the Goods and Services Tax Identification Number (GSTIN), will be provided to every PAN holder as per his or her PAN details.
- Apart from this, a temporary login ID and a password will be given, which will need to be used to access the GST portal. This is very important for entering the necessary details as well as supporting documents.
- After this step, the assessee will receive an ARN (Application Reference Number) which will be offered by GSTN (GST-Network). When the assessee obtains the ARN, he or she will move to GST on the fixed launch date with the provisional certificate.
Effects of the brand new GST regime
In the new tax regime, there will be one unique registration for each PAN. The current assessees will get one temporary ID for each state where the business is already incorporated in the present excise or service tax regime. The other new registrations for a state will be included as an extra business location on the GSTN portal.
Delay in GST launch
The introduction of GST is getting delayed due to difficulties such as taxation over high seas, jurisdiction over assessees.
This advanced indirect system is scheduled to be launched on July 1, 2017.