What is a PAN Card & why do you need one?

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What is a PAN Card?

 

Permanent Account Number (PAN) is unique alphanumeric combination issued to all juristic entities identifiable under the Indian Income Tax Act 1961. 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 ID proof.

 

This number is almost mandatory for financial transactions such as opening a bank account, receiving taxable salary or professional fees, sale or purchase of assets above specified limits etc.

 

The primary purpose of PAN is to bring a universal identification key factor for all financial transactions and indirectly prevent tax evasion by keeping a track of monetary transactions of high net worth individuals.

 

The PAN is unique, national, and permanent. It is unaffected by the change of address, even between states.

Why do you need to have one?

  • Opening bank account in India by any resident or non-resident Indian
  • For bank deposits of over Rs 50,000
  • Opening demat and trading account in Indian stock market investment
  • To purchase any securities more than Rs 1,00,000
  • For demand drafts exceeding Rs 50,000
  • Cheque deposits of over Rs 50,000
  • Purchase or sale of any property in India
  • Purchase or sale of cars
  • Payments for travel expenses more than Rs 25,000
  • TDS return to income tax department 

Who can apply for a PAN Card?

All existing assessees or taxpayers or persons who are required to furnish a return of income, either on behalf of self or others, must obtain PAN.

 

Any person, who intends to enter into economic or financial transactions where quoting PAN is mandatory, must also obtain PAN.

Can a minor apply for a PAN Card?

Section 160 of IT Act, 1961 provides that a non-resident, minor, lunatic, idiot, and court of wards and such other persons may be represented through a Representative Assessee. In such cases, application for PAN will be made by the Representative Assessee.

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