Introduced as mainly a way to identify an individual from taxation point of view, the PAN card is used for various other purposes as well. In this post let us have a look at situations where you will need a PAN card in India and why is PAN card important in India.
Permanent Account Number is a 10 digit alphanumeric number issued by the Income Tax Authorities under the supervision of Central Board of Direct Taxes or CBDT. It is a unique number assigned to an individual and is mandatory from taxation point of view and every individual should have one. The primary motive and purpose of a PAN card is to track the financial transactions carried out by individuals so as to keep tabs on any illegal money laundering and also to avoid tax evasion. However apart from filling your taxes and giving details of your financial transactions, PAN is required for a number of other reasons as well. So when will you need a PAN card in India, let’s have a look.
1. Filling IT returns: The most obvious and primary purpose of getting a PAN card in the first place.
2. Legitimate ID proof: PAN card is accepted and used as a valid ID proof in all cases and at all Government and non-government avenues that require an ID proof such as for passport, ration card, voter ID card, gas and electricity connection etc.
3. At your Job: Your employer will need your PAN when you join any company for taxation purposes. Employers deduct taxes at source or TDS, professional tax etc. Moreover they need your PAN card to show their outgoings to you in form of salary when they file their tax returns.
4. Getting telephone connections: While cellular service providers do accept any alternate government issued ID proof, Government run operators like MTNL and BSNL may require PAN details.
5. Opening a Bank account: Banks will require your PAN when you approach them for opening a new account. This is because they have to keep tabs on all high cash transactions and report periodically to the RBI as per RBI norms. And in any case bank accounts involve money transactions, so PAN is mandatory while opening bank accounts.
6. Cash Deposits in Banks: If you deposit any cash of Rs. 50,000 and above, you will be asked to quote your PAN. Any cash transaction above this limit has to be reported to the RBI as a rule. This is an effort towards curbing money laundering and black money.
7. Foreign currency exchange for international Holidays: You will not get your foreign exchange for your foreign travels if you do not submit a copy of your PAN card, even if you have a valid visa and passport and travel tickets. To avail foreign exchange, PAN card is required.
8. Payments at Hotels: If you make cash payments of over Rs. 25,000 at hotels and restaurants, quoting your PAN is mandatory.
9. Bank FDs: When you take a bank FD of Rs. 50,000 or more, you will need your PAN card. Banks also require this because they deduct TDS on the interest you earn on the FDs.
10. Post Office Deposits over Rs. 50,000: Just like bank FDs, PAN is required in case you open Post Office deposits of Rs. 50,000 or over.
11. Trading in Shares: Share trading is also a place, where you will need PAN card. You will need to furnish your PAN details to your broker as well as Demat and Trading account provider.
12. Mutual Fund Investments: Similar to shares, while investing in mutual funds you will need to have a PAN card and quote the PAN for your mutual fund request to be accepted.
13. Property Transactions: A Property transaction is another time when PAN card is needed in India. During the sales deed and also at the time of registering the property, PAN of both the buyers and sellers are required, or else the transaction cannot be completed.
15. Vehicle Purchase: You may be asked for a PAN card if you are buying an expensive car or automobile in some cases.
As we saw above, there are a lot of areas where having a PAN has become a necessity. The scope and areas where PAN card is required in India have slowly-slowly expanded and hence PAN card is important in India to have and is mandatory in a lot of cases.