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Permanent Account Number (PAN) now compulsory for mutual funds

   To invest in mutual funds (MFs), a PAN number is now mandatory. As per the revised regulations, all new and existing mutual fund investors will need to furnish their PAN (Permanent Account Number) details from next year irrespective of the size of the investment.


   This is part of the revised know-your-customer (KYC) compliance norms to be adopted by fund houses from next year to comply with money laundering prevention rules. KYC norms were first implemented in the mutual fund industry in February 2008 for all investments of Rs 50,000 or more in mutual fund schemes. Subsequently, the rules were revised with effect from October 1, 2010 and all investors other than resident individuals were asked to furnish PAN irrespective of the amount. However, individual investors were allowed to invest up to Rs 50,000 without quoting PAN details.


   Association of Mutual Funds of India (AMFI) has asked mutual fund houses to comply with new KYC norms and collect PAN, address proof and photograph of all their new and existing investors with effect from January 1, 2011. The AMFI decision follows a direction from market regulator Securities and Exchange Board of India (SEBI) earlier this year to tighten KYC norms to check fraudulent practices. Fund houses have started the process of collecting the required documents from their investors.


   Though MF investors will face some additional paperwork now, the documentation would be centralised across all the fund houses with the help of PAN and this will benefit them in the long run. In a circular, AMFI has said that the industry has signed up CDSL Ventures Ltd (CVL) to undertake the centralised record keeping of all KYC documents. On completion of the one-time process, investors will be able to transact across multiple mutual funds without having to submit their documents each time.

PAN made easy    

The Income Tax Department has authorised UTI Technology Services Ltd (UTITSL) and NSDL to set up and manage IT PAN Service Centers in all cities or towns with an Income Tax office. IT PAN Service Centers supply new PAN application forms (Form 49A), assist the applicant in filling up the form, accept the application and issue acknowledgement slip.


   After obtaining PAN from the Income Tax Department, they will print the PAN card and deliver it to the applicant. Nominal service charges are payable to the IT PAN Service Centers. PAN application can be made only on new Form 49A.
   

These documents and information have to be submitted along with the application for Form 49A:


• Individual applicants will have to affix one recent, coloured photograph (stamp Size - 3.5 x 2.5 cm) on Form 49A

• Any documents listed in Rule 114 must be supplied as proof of identity and address

 

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