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Thursday, July 16, 2009

AMFI guidelines on PAN requirements as per Sebi circular

With effect from 1 August 2009

SEBI, vide circular dated 27 April 2007, had made income-tax Permanent Account Number (PAN) mandatory for all transactions in securities market. But currently SEBI has conveyed that micro schemes such as SIPs upto Rs. 50,000 per year per investor shall be exempted from the requirement of PAN. Instead this may be operationalized by accepting other standard specified identification instruments as:

- Identity Card, Driving License

- Government / Defense identification card

- Passport

- Photo Ration Card

- Photo Debit Card (Credit card not included because it may not be backed up by a bank account).

- Employee ID cards issued by companies registered with Registrar of Companies

- Photo Identification issued by Bank Managers of Scheduled Commercial Banks / Gazette Officer / Elected Representatives to the Legislative Assembly / Parliament

- ID card issued to employees of Scheduled Commercial / State / District Co-operative Banks.

- Senior Citizen / Freedom Fighter ID card issued by Government.

- Cards issued by Universities / deemed Universities or institutes under statutes like ICAI, ICWA, ICSI.

- Permanent Retirement Account No (PRAN) card issued to New Pension System (NPS) subscribers by CRA (NSDL).

- Any other photo ID card issued by Central Government / State Governments /Municipal authorities / Government organizations like ESIC / EPFO.

Applicability & Transactions covered-

The following transactions will be covered:

- Systematic Investment Plans (SIPs) where aggregate of installments in a rolling 12 month period or in a financial year i.e. April to March does not exceed Rs 50,000 (to be referred as Micro SIP hereinafter).

- The following transactions will not be covered as they are currently not considered either for PAN or KYC requirement:

1.Redemption

2.Switch

3.Systematic Transfer Plans

4.Systematic Withdrawal Plans

5.Dividend Reinvestments / Sweep transactions

- This exemption will also not be applicable to normal purchase transactions upto Rs. 50,000 which will continue to be subject to PAN requirement.

- This exemption will be applicable only to investments by individuals (including NRIs but not PIOs), Minors and Sole proprietary firms. HUFs and other categories will not be eligible for Micro SIPs.

- The exemption is applicable to joint holders also.

It is recommended that this procedure be implemented by all mutual funds with immediate effect and latest by 1 August 2009.

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