What is PAN?
PAN means Permanent Account Number. A PAN card contains a unique ten-digit number, which is a combination of alphabets and numerical. PAN card is used for keeping track of every transaction of a taxpayer. The PAN is a unique identification number that is only issued to the taxpayers and acceptable and shared by everyone, everywhere all over India according to the Income-tax act, 1961. This is why two taxpayers can’t have the same PAN number. The Income-tax department of India runs the PAN system to keep a close eye on every taxpayer and their transactions which they held against their PAN number. It is a computer-based system and it always assigns a different combination of alphabets and numerals to every individual. The Income-tax department of India issues the card containing a unique identification number under the supervision of the central board of Direct Taxes (CBDT). It is also used for an individual’s identification card but it is not considered as proof of nationality because the Indian government issues PAN card to foreign investors and visa holders as well.
| Authority issuing PAN Card | Income Tax Department, Govt. of India |
| PAN Customer Care Number | 020 – 27218080 |
| Establishment of PAN Card | 1972 |
| PAN Card Validity | Life Time |
| Cost of PAN Card | Rs. 110 |
| Number Of Enrolments | 25 crore (approximate) |
Who Can Have a PAN?
| Category | Signatory |
| Individual | Self |
| HUF | Karta |
| Company | Director |
| Firm/LLP | Partner |
| AOP/BOI | Authorized Signatory |
Everyone who has Indian nationality, age above 18, with identification proof and a valid source of income can apply for a PAN card(as stated by the Income-tax department). Although in some cases our government issues the PAN card to foreigners who are looking to invest in the Indian market or Visa holders for keeping track of their expenses and income.
In some cases, a PAN card can be issued to a minor with the permission of parents or guardians and can be used as an alternative identification card. You need to provide all the documents with 2 passport size photos to acquire one. You need to fill out form 49A/49AA to apply for the PAN card and submit all the documents such as identification proof, address proof, age proof ( even in case of minor with guardians signature).
You also need to pay the minimum fee of Rs. 107 for Indian citizens and Rs. 989 for foreigners. If you have lost your PAN card and want to apply for a new card then again you need to fill out the form 49A against the same PAN number and if you don’t have the number then you can apply for a new PAN card stating it on form 49A. In case if you want to make any changes to the PAN card such as your name, age, or address then you can do so by filling out the form 49A/ 49AA.
Uses of PAN
There are many benefits of a PAN card. Let’s know about them in detail.
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Income Tax Return Filing
All the people and companies who are liable to pay taxes and fall under the category set by the Income-tax department need a PAN card to file returns. It is one of the primary reasons for having a PAN card and that is why people and companies like HUF apply for one.
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Identity Proof
One of the important purposes of a PAN card is that it can be used as Identity proof. Like any other proofs such as Voter card and Aadhaar card. It is accepted and in fact mandatory when you are applying for a job or passport. It is also valid proof when you are involved in any finance work.
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Tax Deductions
Another purpose of the PAN card is for taxation reasons. If you don’t have a PAN card or you have not linked it with your bank account then the bank will deduct more TDS on your savings. Like instead of deducting 10% bank will deduct 30% if the limit of your savings exceeds.
- Asking for Income Tax Refund
When TDS is deducted from a salaried employee it is based on an average percentage to keep the calculations easy on monthly basis. Though sometimes an individual pays more than the actual tax payable. In such cases, they can ask for a refund which requires a PAN number.
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Opening a Bank Account
Another important use of PAN card is while opening a bank account whether its government, private, or co-operative bank. They need a PAN card and Aadhaar card for validation as per the Reserve Bank of India regulations.
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While Starting New Business
If you are planning to start your own business or open a company then you must have a PAN card for its registration purposes. In India, you can only start a new business if you have a Tax Registration Number which you cannot have without a PAN card.
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Opening Demat Account
If you like to invest in shares and making trades then you need a Demat account which you can’t open if you don’t have a PAN card. It is mandatory to have a Pan card to have shares in dematerialized form.
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Buying or Selling of Property
One of the uses of a PAN card is while buying or selling a property. You are not allowed to buy or sell any property such as land, shop, house if you don’t hold a PAN card. You require a PAN card in every situation where money is involved.
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While traveling internationally
When you are traveling internationally for business or holiday purpose the one thing you need is money and if you are going to spend more than Rs. 50,000 then you must have your PAN card with you. You are not even eligible to make any Forex purchase without it.
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Time Deposit
Another benefit of a PAN card is that you are eligible to make deposits over 5 lakh to any bank, post offices, or private finance companies. It is one of their mandatory proof for tax and income validity.
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Hotel and Restaurant Bills
When you make a payment for more than Rs. 50,000 at any hotel or restaurant then you need your PAN card. Many of you might know that when you have hosted an official party of family functions.
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Cash Cards and Pre-Paid Instruments
While making a cash payment of more than Rs.50,000/ annually. You will need your PAN for authorization according to recent changes made by the prime minister in the union budget after the demonetization to keep a record of the cash flow.
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Buying and Selling of Goods and Services
Just like the property you also need a PAN card while purchasing or selling goods and services every time if it exceeds the limit of Rs.2 lakh.
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Bank Drafts, Pay Orders, and Banker’s Cheque
Another importance of a PAN card is while making a transaction, bank draft, pay orders, or banker’s cheque more than the amount of Rs. 50,000 in a day as a new policy by the government of India.
What Document Required for PAN?
To apply for PAN Card, you should present a large group of records including Form 49A or 49AA. Given beneath is the rundown of records you should submit while applying for a PAN Card:
Types of PAN
- Individual
- Hindu undivided family-HUF
- Company
- Firms/Partnerships
- Trusts
- Society
- Foreigners
| For an individual candidate | Evidence of character, for example, Aadhaar, Voter ID, Driving License, and so on. Evidence of address, for example, service charge, water charge, financial balance articulation, the proclamation of your Master Card, Passport, Driving License, Domicile authentication gave by the Government, a testament of marriage, registration declaration, and so on |
| for a Hindu Undivided Family (HUF) | You should present an oath given by the Karta of the HUF. The oath should correctly specify the name, address, and each successor father’s name. In case if you have a place with HUF and are exclusively applying for a PAN Card, at that point you should present the verification of personality, confirmation of address, and date of birth evidence. |
| For organizations enrolled in India | A duplicate of the Registration Certificate provided by the Registrar of Companies is to be submitted. |
| Firms/ Partnership (LLP) | Certificate of Registration issued by the Registrar of Firms/ Limited Liability Partnerships and Partnership Deed. |
| Firms and Limited Liability Partnerships enlisted or shaped in India | A duplicate of the Registration Certificate given by the Registrar of Companies is to be submitted. A duplicate of the Partnership Deed is to be submitted. |
| For Trusts framed or enrolled in India | You should present a duplicate of the Registration Certificate Number provided by a Charity Commissioner. |
| For Association of Persons | Arrangement Copy or Registration Number Certificate provided by the Registrar of Co-usable Society or Charity Commissioner, or any record gave by the Central or State Government which correctly specifies your location and character. |
| Candidates who are not citizens of India | Confirmation of character, for example, a Copy of PIO provided by the Government of India, Copy of OCI provided by the Government of India, Passport Copy, and so on. Confirmation of Address can be bank proclamation of the private nation, NRE Bank articulation, Copy of VISA allowed by an Indian organization, enlistment testament provided by FRO. |
Now, you know in detail about a PAN card and its uses and benefits. You are also aware of the documents you needed for every situation while applying or making any corrections.
