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Mandatory Requirement of PAN for Foreign Directors

The Finance Act 2018 brought certain key amendments to the Income-tax Act, 1961, among which, a major amendment seeking to widen the tax base has been made by introducing clause (v) and (vi) to sub-section (1) to Section 139(1):

In section 139A of the Income-tax Act, in sub-section (1),— (a) in clause (iv), the word “or” shall be inserted at the end; (b) after clause (iv), the following clauses shall be inserted, namely:–– “(v) not being an individual, which enters into a financial transaction of an amount aggregating to two lakh fifty thousand rupees or more in a financial year; or (vi) who is the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer of the person referred to in clause (v) or any person competent to act on behalf of the person referred to in clause (v),”.

There is always a natural person who enters into a transaction on behalf of a non-individual entity. Therefore, the amendment shall be of no use if the related natural person behind such entities doesn’t obtain the PAN.

Thus, in order to make the amendment useful, it is also proposed that the managing director, director, partner, trustee, author, founder, Karta, CEO, principal officer or office-bearer or any person competent to act on behalf of such entities will also have to apply for allotment of PAN. Every person, whether a resident or non-resident in India, who is a director in an Indian Company that has a financial transaction of Rs. 250,000/- or more, in a financial year, will have to compulsorily obtain Indian PAN Card. This amendment might also help in tracking the shell companies.

Previously, such non-residents had the option to submit their passport number along with a statement stating that possession of a PAN does not apply to them under the Income Tax Act, 1961 and only the Resident Directors were required to submit their PAN. The same criteria for obtaining PAN will now apply to the foreign partners of the Limited Liability Partnership (LLP) after this amendment. Failure to comply with the provisions relating to Permanent Account Number (PAN) will attract a penalty of Rs.10,000 under Section 272B of the Income Tax Act, 1961.

Even though it is a welcome move by the Government, lack of definition of the term ‘financial transaction’ has raised doubts among the business community. The proposal could apply to all foreign entities who either purchase or sell any goods from or to any Indian taxpayer and who, therefore, ordinarily have no income chargeable to tax in India. Clarification in this regard is still awaited.

If you would like to know more about this amendment please feel free to email on kartik@singhanialaw.com

Portuguese Citizenship for Sephardic Jews

The new Decree-Law 30-A/2015, 27/02 changed the Portuguese Rules on Citizenship establishing the requirements for the acquisition of Portuguese citizenship by descendants of Portugal’s Sephardic Jews.

Sephardic are Jews from Iberian Peninsula Community who was expelled by Inquisition during the 15th and 16th centuries.

The Portuguese Citizenship Act allows that a foreign citizen descendant from Sephardic Jews that intended to obtain Portuguese citizenship by naturalization had to demonstrate the tradition of belonging to a Sephardic community of Portuguese Origin.

The language, family names, objects and documents, which demonstrate a strong bond to the Portuguese Jewish Cult, can prove the historical heritage to Portugal.


  • Be of age or emancipated under Portuguese Law;
  • Not have been convicted of a crime punishable under Portuguese Law with imprisonment of three years or more.


  • Birth certificate
  • Copy of Passport
  • Criminal Record issued by the authorities of the country of birth, country of nationality and country of residence (if other from the country of birth or nationality);
  • Document issued by Sephardic community of Oporto or Lisbon.

Therefore, a foreign citizen who descends from Portugal’s Sephardic Jews may obtain Portuguese Citizenship without speaking Portuguese, residing in Portugal or come to Portugal in person to obtain Portuguese Citizenship.

The average time to complete the process after submission in Portuguese Central Registration is about 6 months.

This process allows to descendants of Portugal’s Sephardic Jews connect to their historical heritage and obtain Portuguese Citizenship.

The acquisition of Portuguese nationality has many benefits, including the right to free movement throughout the Schengen area and opportunities of life and work within the European Union member countries.

To know more please contact us in asag.pt