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CS Executive · Setting Up of Business, Industrial and Labour Laws · Various Initial Registrations and Licenses

Arjun Traders, a proprietorship, already has a PAN. It later converts into Arjun Traders Pvt Ltd by incorporating a new company and transferring the business to it. The director suggests continuing with the proprietor's PAN for the company. What is the correct position?

The company must obtain a fresh PAN in its own name. A company is a separate legal person from the proprietor, and PAN is unique and non-transferable between persons. It cannot be converted or borrowed, and TAN is only an additional number for tax deduction purposes.

  1. AThe company is a new person and must obtain a fresh PAN in its own nameCorrect
  2. BThe company may use the proprietor's PAN after intimating the Registrar
  3. CThe proprietor's PAN is converted automatically into the company's PAN
  4. DThe company needs only a TAN, since PAN is retained from the proprietorship

Explanation

A company is a distinct juristic person from its promoter, so it needs its own PAN. PAN is not transferable between persons, and nothing converts it automatically. TAN does not replace PAN, so the company must have both if it deducts tax.

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