Get that PAN card
A Permanent Account Number has become a must for those who want to invest in mutual funds, writes Arnav Pandya.india Updated: Aug 07, 2007 03:01 IST
Several mutual fund investors might find themselves stuck without being able to make investments as new guidelines come into effect. The proposal for submission of Permanent Account Number (PAN) proof along with every investment might have been postponed till the end of December 2007 but this actually does not push back the responsibility of action for investors in the matter.
The reason why this issue is at the centre of attention is because from July 2, PAN is the sole identification number that has to be considered by the participants transacting in the securities market including mutual funds. This means several things for different types of investors because the scope of the coverage is very wide. Existing investors are covered and even prospective investors are covered. This means if you want to invest in the scheme, then you will have to submit the PAN proof. <b1>
It is not just the first applicant who has to provide the PAN proof but all the joint applicants also have to do this. More importantly even non-resident Indians have to provide a PAN proof, which makes obtaining the number absolutely essential for all of them investing in mutual funds. Now, the limit has been extended till the end of December but this is little relief for all the investors because no action still means no investment.
Let us look at why this is present. The rule relaxation says very clearly that till December 31, investment will be permitted along with the evidence of having applied for PAN. It is not that the requirement is difficult to fulfill but in several cases the process will take time. In the meantime the investment is stuck. The process of applying and getting a PAN could be a bit of an additional strain for people who do not have income above the taxable limit and hence would not have filed returns in the normal course of events.
The procedure required by investors might vary depending upon the funds but here is a general look at what it will involve. For someone who is investing below Rs 50,000 they need to submit a PAN card or some proof that they have applied for a PAN. This makes it important for the person to at least make the application. The situation gets tough for someone who will have an investment of more than Rs 50,000 because if they do not have a PAN card then they have to submit two things. They can submit the copy of the PAN or they will need evidence of having applied for PAN and they will also have to submit Form 60 along with proof of address.
Investors on their part need to understand that there is no way in which any investment will be accepted by the mutual funds without making efforts towards having a PAN so the earlier they move in this direction the better it will be.
(The writer is a Certified Financial Planner)