A PAN (Permanent Account Number) card is crucial for taxpayers in India as it is essential for all financial transactions and is used to monitor the inflow and outflow of money. It plays a significant role in paying income tax, receiving tax refunds, and maintaining communication with the Income Tax Department.The Indian Budget 2019 proposed that individuals who do not possess a PAN could use their Aadhaar number for filing returns and other purposes where PAN was previously mandatory. This means that if you have not linked your PAN with Aadhaar or do not have a PAN but possess an Aadhaar, you can use your Aadhaar number instead. However, the rules regarding this are still being developed and approved.
Despite this provision, PAN remains necessary for a wide range of financial transactions. Additionally, a PAN card serves as a proof of identity.
What is a PAN card?
A PAN (Permanent Account Number) is a 10-digit unique identification number issued to taxpayers by the Income Tax Department. When a PAN is allotted to an entity, a physical PAN card is provided, which contains the PAN number along with the individual's name, date of birth, father’s or spouse’s name, and photograph. Copies of this card can be used as proof of identity or date of birth. The PAN card serves as a crucial document for various financial and legal purposes, ensuring that all transactions and tax-related activities are properly recorded and monitored.
Uses of PAN in financial transactions
Here are some of the uses and advantages of having a PAN card:
- Paying direct taxes: PAN needs to be quoted while paying direct taxes.
- Income tax payments: Taxpayers must input their PAN when paying income tax.
- Business registration: PAN information must be provided when registering a business.
- Financial transactions: PAN is required for numerous financial transactions, such as:
- Depositing cash over Rs. 50,000
- Purchasing or selling immovable properties
- Buying motor vehicles above a specified limit
- Making investments in securities over Rs. 50,000
- Opening a bank account or applying for a credit card
General uses/advantages of having PAN
- Proof of Identity: PAN card contains information such as name, age, and photograph, making it a valid identity proof across the country.
- Track tax payments: PAN helps keep track of your tax payments, ensuring they are verified and preventing multiple payments.
- Unique identifier: PAN is unique to each entity, reducing the risk of misuse for tax evasion or other fraudulent activities.
- Utility connections: PAN card can be used to obtain utility connections such as electricity, telephone, LPG, and internet.
