Self help group operations

Now a days PAN is made compulsory. You have to apply for PAN or else close your account and try in Post office.

Jan 27, 2016 - Any individual with yearly income exceeds the basic exemption limit (Rs 2 lakh at present) or any organization/business exceed turnover of Rs 5 lakh is required to obtain a Permanent Account Number (PAN) by the Income-tax Act in India.nOW FOR SAVINGS BANK account also account holderts it is mandatory to have PAN card.

As mentioned by the above experts, the situation might necessitate the requirement of having a PAN.

But, having a PAN will have some consequences like compliances and possible tax effect on income. Since currently the income must be accruing to 19 members individually who might not be paying tax or could be under lower tax bracket, but once we create a legal entity, it might attract tax provision and perhaps the tax at higher rate of say, 30% because the aggregate income of 19 members, which would now accrue to the new entity would be more than what was earlier being accrued to the individual members. Further, the newly incorporated entity will also have to file the tax return....-Cost of compliance with laws.

[There might not be double taxation like it might not happen that the same income is taxed in the hands of the new entity and the old members.]

If the income of ALL the members is in 30% tax bracket, then it might not be much of a problem, but then I suppose those people wouldn't be making "small investment" in saving bank account.

You will need to evaluate as to whether creating a legal entity is going to benefit the individual members?

I am considering this point specifically because there was the reference of "small savings". Small savings is usually not done by very rich people. If without creating a new entity, individual members are not paying tax or are paying low tax then we must think about the benefits of creating the new entity.

Creating a new entity is advisable if the operations are on a big scale, for a small level of operations the compliance burden can hinder the objectives.

[Note-: I have not advised to not to obtain PAN or creating a new entity, whether by way of partnership or Association of persons or any other mode. My advice is to first evaluate the effect of the same.]

Dear Sir/Madam

Please let me know if any Self Help Group recive any advance amount for conducting trining on capacity building of its members wheather service tax should be deducted on the advance amount. In this case the SHG is not playing a role of doing   a consultant service for organizing the training. The SHG is requesting 50 percent of the budgeted amount to carry out the expenditure and will submit the details of the expenditure at the time of final settlement.

Soumyajeet

Is it possibel to obtain a PAN in name of SHG that is not registered under societies / trust act

Yes you can get a pan card of self help group as AOP that is Association of Person). Contact at 9213598936.