Featured Image Caption: Importance of PAN Card
The Income Tax Department issues Permanent Account Numbers (PAN) to taxpaying entities that carry out businesses in the country. PAN is necessary to pay income tax and file returns. The number ensures that people do not evade taxes as all financial details of the entity are linked with PAN and the department can track the financial history in minutes. To make PAN more robust and full proof, the government has made it mandatory to link PAN with Aadhaar. This step would ensure that duplicate PAN cards are weeded out from the system and only genuine PAN cards remain active.
There are a number of things for which PAN has been made mandatory.
Let us find out 11 top reasons why you should have a PAN card:
1. Identity Proof
PAN can be used as an identity proof as the document is issued by the government and contains the photograph and signature of the user. However, PAN cannot be used as the proof of residence as the address of the PAN card holder is not mentioned on the card. You can use the PAN while travelling in trains, air travel, hotel booking, etc.
2. Paying Taxes
Individuals, companies, partnership firms or any organisation carrying out business in India and making profits from it have to pay the income tax to the government if they fall under the taxable income bracket. PAN is mandatory to be quoted for paying taxes. Even if you do not fall in the taxable income bracket, you have to file income tax returns and PAN has to be furnished in that case.
3. For the Employer
You have to provide your PAN to the employer so that they can deduct TDS (Tax Deducted at Source). They also need your PAN to show the outflow of the salary into your account while filing income tax returns. Your PAN is also required to open your EPF account which is a retirement fund whose contribution is shared equally by the employer and the employee. You also have to get your e-KYC done by submitting your PAN and Aadhaar in case you want to avail online facilities at the EPF member portal.
4. Opening a Bank Account
As per the new guidelines laid down by the RBI, PAN has been made mandatory to open new bank accounts. Also, people have to link existing bank accounts with PAN. The government has also made it mandatory to provide Aadhaar card for opening new bank accounts. People also have to link their existing bank accounts with Aadhaar. However, the deadline for linking Aadhaar with bank accounts has been extended indefinitely by the Supreme Court as of now.
The PAN card has to be mandatorily provided to apply for a new credit card or while availing a loan. Lenders use the PAN of the applicant to check the credit score in order to approve and sanction the loan.
5. Cash Deposits above ₹ 50,000
A person has to furnish his PAN while depositing an amount of ₹ 50,000 or more in his or other bank accounts. RBI has to be notified about all transactions amounting above the prescribed limit. This step will help the government to curb money laundering and generation of black money. The person has to furnish his PAN for cash transactions above ₹ 50,000 while purchasing any product as well. PAN has also become mandatory for buying or selling bullion jewellery worth ₹ 5 lakhs and above.
6. Buying/Selling Properties
Properties and immovable assets have been a primary investment option for black money hoarders as they can park their huge amount of black money safely and evade taxation agencies. Therefore, in case you want to buy or sell a property worth ₹ 5 lakh or more, you will have to mandatorily provide your PAN card. This allows the government agencies to keep a track of big ticket purchases done by an individual or an organisation. In case the property is bought or sold under joint capacities, all parties have to furnish their PAN card at the time of transaction.
7. Buying/Selling of Vehicles
You also have to furnish your PAN when you bring a four-wheeler to your home. PAN is mandatory for the sale/purchase of cars above ₹ 5 lakhs. As of now, PAN has not been made compulsory for buying two-wheelers. Cars and SUVs are the second most preferred investment options for black money hoarders. This step by the government will help in tracking the high value transactions.
8. Stay at Hotels/Resorts
A person staying at a hotel has to furnish his PAN card if the total bill at the hotel exceeds the limit of ₹ 25,000. For all bills above the prescribed limit, in India or abroad, PAN has to be provided.
9. Travel or vacation
You might love travelling in or outside India. But the next time you plan a lavish trip, you will have to furnish your PAN in case total spending in a day exceeds the limit of ₹ 25,000. RBI wishes to be notified every time a taxpayer breaches this threshold in order to keep a tab on the monetary transactions of an individual.
10. Investment in Mutual Funds
ELSS and a number of other tax saving mutual funds allow people to earn profits and also save taxes at the same time. The government has made it mandatory to provide PAN while carrying out transactions amounting to ₹ 50,000 and above. In case you plan to buy or sell securities, you have to furnish your PAN if the transaction exceeds the threshold limit of ₹ 1 lakh.
11. Investment in Share Market
Investors planning to invest their money in the share market have to furnish their PAN cards to open a trading account. No relief has been provided to applicants in terms of the monetary limit for these accounts. In case you do not provide your PAN at the time of opening the account, your application will be rejected by the authority and you will not be able to carry out transactions from your account.
By Sumit Kumar
is a content writer with specialization in the field of personal finance. He has expertise in non-core financial products such as Aadhaar, PAN, EPF, etc. and is known for providing to the point solutions. He writes to educate people and solve common queries related to government schemes and personal finance. In this post he has mentioned about why you need a Pan Card and it is mandatory to link PAN with Aadhaar card.