Date:24/07/2007 URL: http://www.thehindubusinessline.com/2007/07/24/stories/2007072452461100.htm

Back MF investors in Sikkim in a quandary over mandatory PAN directive

Central direct taxes not applicable; Chamber seeks exemption from SEBI order

Sarikah Atreya

Gangtok, July 23 The mandatory requirement of quoting Permanent Account Number (PAN) in mutual fund investments by all categories of investors throughout the country with effect from July 2, 2007, has put potential mutual fund investors from Sikkim in a quandary.

This is because Central direct taxes are not extended to Sikkim. The State still enjoys the old laws which are enshrined in Article 371 F of the Constitution, which provides special status to Sikkim after its merger with the Indian Union in 1975.

Sikkim has its own Income Tax law — the Sikkim Income Tax Manual 1948.

Sikkim traders do not have PAN cards as direct income tax rules are yet to be implemented in the State.

The Sikkim Chamber of Commerce (SBC) has said that the announcement made by SEBI making it mandatory to quote the PAN in mutual fund investments by investors has resulted in a “great loss of opportunity” to Sikkimese investors in mutual fund investments.

Mr S.K. Sarda, President, SBC, said here on Monday that by asking for PAN, it had become difficult for investors in Sikkim to make any more investments. “A potential investor from Sikkim is thus being barred from taking advantage of the growing economy through mutual fund investments,” he said.

“Hundreds of applications deposited with banks after July 2 remain unprocessed, creating a lot of confusion in the minds of people here,” Mr Sarda added.

The Sikkim Chamber of Commerce has urged SEBI to exempt residents of Sikkim from the mandatory requirement of quoting PAN in all mutual fund investments, Mr Sarda said.

“We are given to understand that the matter is under the active consideration of SEBI. We hope to get a positive response from SEBI on this issue soon,” Mr Sarda said. Even for traders involved in the Nathula border trade, the Import-Export Code (IEC) for traders, normally issued against their Permanent Account Number (PAN), is not required.

The notification of exemption was issued after the Sikkim Government took up the matter with the Commerce Ministry.