If you are investing for the first time in mutual funds, ensure that you hold a PAN (permanent account number).

This is also one of the documents you submit to get a KYC (know your customer) compliance, another mandatory requirement to invest in stocks markets and mutual funds.

So why do mutual funds require you to submit PAN? Effective July 2007, the Securities and Exchange Board of India (SEBI) made PAN the sole identification number for all transaction in the securities market.

PAN proof

Earlier, only mutual fund transactions that were over Rs 50,000 required a PAN. But since January last year, all mutual fund transactions require PAN.

All unit holders, including the guardians in the case of minors, need to submit their PAN to the fund house. That means even a joint unit holder must submit this proof.

This is mandatory even if you are a power-of-attorney holder or lien holder. Non-resident Indians who wish to buy mutual funds here will also be subject to this requirement.

If you had invested, say, five years ago, when the PAN requirement was not mandatory, your periodic accounts statement will say “PAN not verified” if you had not submitted PAN then. In such a case, you need to submit a copy of your PAN along with the original for verification. If you do not, any additional purchases or switches cannot be made.

Should investors who are not tax assesses also submit this proof for investing in funds? Yes, they should. As it is a mandatory requirement, even if your regular income is below the tax slab and you have never been required to pay taxes, you need a PAN number to apply for mutual fund units.

So is no one exempt? Investors from Sikkim are. The SEBI, through a circular in April 2008, exempted investors residing in Sikkim from the mandatory requirement of PAN for their investments in mutual funds. But these investors need sufficient identity proof and documentary evidence of being residents of Sikkim.

How to apply?

Fund houses are not required to help you get your PAN number. There are separate authorised agents to do this. You can also visit the following Web sites and send the application and required documents directly to the address mentioned by the Income-Tax Department or the authorised service provider. The links are tin.tin.nsdl.com/pan/index.html,www.utitsl.co.in/pan/ and www.tin-nsdl.com/DownloadsPAN.asp . You can also verify the status of your application through these Web sites.

Once you get your PAN card, you will have to show the card for verification to the mutual fund agent or the fund house. If you live abroad or cannot go to the agent to show your original PAN card, a scanned copy will not do. But you can send a copy of the same attested by a notary public, a gazetted officer, a manager of a scheduled commercial bank, or by an official from the local office of the Indian Embassy or Consulate, if you live abroad.

If your PAN is verified by a fund house or by a registered transfer agent such as CAMS and you make further investments through them, you can always quote your earlier folios for your PAN updation for the new investments.

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