What is PAN Card? Why having PAN Card is Important? | Complete Details. In the previous article, we have given Income Tax Deductions Under Section 80C to 80U. Today we are providing the details of Pan Card I;e What is pan card, why having pan card is important ?. PAN full form is Permanent Account Number. PAN card is a code that acts as an identification for Indian nationals, especially those who pay Income Tax. It is a unique, 10-character alpha-numeric identifier, issued to all judicial entities identifiable under the Indian Income Tax Act, 1961. An example number would be in the form of ARLPA1298H. It is issued by the Indian Income tax department. under the supervision of the Central Board for Direct taxes(CBDT) and it also serves as an important proof of identification.
It is also issued to foreign nationals (such as investors) subject to a valid visa and hence, it is not acceptable as a proof of Indian citizenship.
The PAN is mandatory for a majority of financial transactions such as opening a bank account, receiving taxable salary or professional fees, sale or purchase of assets above specified limits etc.; especially high-value transactions.
|Read : Who Shall Apply For Pan Card and Where will you Require Pan Card|
The primary purpose of the PAN is to bring a universal identification to all financial transactions and to prevent tax evasion by keeping track of monetary transactions, especially those of high-net-worth individuals who can impact the economy.
The PAN is unique to each individual and is valid for the life time of the holder, throughout India. An important point to note would be that once issued, the PAN is not affected by a change of address.
Uses and Importance of PAN Card
IT Returns Filing: All individuals and entities who are eligible for Income tax are expected to file their IT returns. A PAN card is necessary for filing of IT returns, and is the primary reason individuals as well as other entities apply for one.
Opening a bank account: A PAN card is required in order to open a new bank account, whether it is a savings or a current account. All banks, whether public, private or co-operative, require the submission of a PAN card in order to open an account with them.
Buying or selling a motor vehicle: If you wish to buy or sell a motor vehicle worth more than Rs. 5, 00, 000, you have to provide your PAN Card details when conducting the transaction.
Applying for a credit or debit card: When applying for either a debit card or a credit card at any bank or financial institution, furnishing your PAN card details is mandated by regulations. The bank will not issue the card if this criteria is not met.
Purchase of jewellery: If you are looking at buying any sort of jewellery that is valued at over Rs. 5, 00, 000, you will have to provide your PAN card details at the time of purchase.
Making investments: Investing in securities is seen as a good way to build your wealth. If you are considering investing in securities, you would have to furnish your PAN details for any transactions amounting to above Rs. 50, 000. This extends to equities, mutual funds, bonds as well as debentures.
Proof of Identity: a PAN card is accepted as valid proof of identity anywhere in the country, and is also considered as proof of age. It can also be used as proof of identity when making an application of passport, voter ID card, driving licence, electricity connection etc.
Foreign Exchange: If you are travelling abroad and wish to convert your Indian currency into foreign currency, you are required to provide details of your PAN at the money exchange bureau/bank/institution where you are converting the money.
Property: Buying, selling or renting property in India now requires PAN card proof. In the case of buying of property, the PAN details of the buyer as well as the seller have to be listed on the sales deed and any other such documentation for the sale to be complete.
|Read : PAN Card Changes w.e.f. 1st January 2016|
Loans: If you require to take out a loan, all loan providers, both banks as well as other lending institutions, require you to submit details of your PAN at the time of loan application. All loans, from education loans to personal loans require PAN details for the loan to be approved.
Fixed Deposits: If you plan on investing your money in a Fixed Deposit (FD) amounting to above Rs. 50, 000 in a bank, you will have to provide your PAN details. This is done as the bank will deduct TDS (Tax Deductible at Source) on the FD interest amount.
Cash Deposits: If you are making a cash deposit that amounts to over Rs. 50, 000 at a time, you will have to submit your PAN details as well. This is in keeping with the RBI mandate, which directs banks to report any large cash deposits to the RBI, as a way to prevent money laundering.
Telephone Connections: If you wish to get a new telephone or mobile phone connection, it is mandatory to submit your PAN details, as private cellular operators will not provide you a connection without it.
Insurance Payments: As per the Income Tax Department directives, PAN card details have to be furnished when making an insurance payment exceeding Rs. 50, 000 a year.
From the above, we see that a PAN card is required for a large number of activities, both financial as well as non-financial.
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