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CMA Intermediate · Direct and Indirect Taxation · PAN

Mehta Traders, a proprietary business of Mr. Rohan Mehta in Surat, has no PAN. Its total sales are likely to be Rs. 6,20,000 in the tax year, and Rohan's total income is below the maximum amount not chargeable to tax. Under section 262(1), is Rohan required to apply for a PAN?

Yes. Under section 262(1)(b), a person carrying on business whose sales, turnover or gross receipts are or are likely to exceed Rs. 5,00,000 in a tax year must apply for PAN. Rs. 6,20,000 crosses the limit, regardless of his total income.

  1. ANo, because his total income does not exceed the maximum amount not chargeable to tax
  2. BYes, because the business turnover is likely to exceed Rs. 5,00,000 in the tax yearCorrect
  3. CNo, because PAN is required only for companies
  4. DYes, but only if he also has to furnish an Aadhaar number

Explanation

Section 262(1)(b) requires a person carrying on business whose total sales, turnover or gross receipts are or are likely to exceed Rs. 5,00,000 in a tax year to apply for PAN. Rs. 6,20,000 exceeds this limit. The income test in clause (a) is an independent condition, so low income does not excuse him.

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