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Mandatory Permanent Account Number (PAN) for Non-Resident Suppliers in India

Zurich, March 17, 2010 - This is to bring India Non-Resident suppliers' attention to the recent amendment to the India Income Tax Act and the consequences for the Credit Suisse invoicing process.

Under the existing Indian Income Tax Laws, tax is withheld from payments made to Non-Resident suppliers for certain types of payments. The rates for withholding tax are prescribed by the Indian Income Tax Act and the Double Tax Avoidance Agreement (DTAA) between the country where the Non-Resident supplier is based and India. With the recent amendment, it is now mandatory for Non-Resident suppliers to register with the Indian Income Tax authorities and obtain the Permanent Account Number (PAN) with effect from April 1, 2010 for tax compliance purposes. The official press release from the Central Board of Direct Taxes, India, is availablehere (PDF).

Important Points in Relation to this Change

  • India Non-Resident suppliers are asked to indicate the PAN in the invoices to be sent to any Credit Suisse legal entity in India for payment on or after April 1, 2010.
  • If the PAN is not obtained, then wherever tax is required to be withheld, the minimum rate of deduction will be 20% or the higher rate as prescribed by the Indian Income Tax Laws or the relevant DTAA. This requirement is applicable to both India-based and Non-Resident suppliers.

Application for PAN

  • The PAN application is to be made in FORM 49A. It can be downloaded from here or it can be submitted online at NSDL.
  • It usually takes 2 to 3 weeks to secure the PAN after filing the application.
  • These guidelines (PDF) contain additional information for new PAN applications.

This notification is only to intimate the new rules that each Non-Resident supplier needs to comply with and is not to be construed as any tax advice from us. This does also not alter any existing tax treatment agreements between your company and our Credit Suisse India legal entities.

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