Want to know pan card uses? Well, you have landed on the right article!
A PAN card is a very crucial document when it comes to an individual's identity. Have you ever been to a government office? Even the most basic task at any office requires an identity card.
Just as with Aadhaar and Voter ID, PAN card is equally important and significant in India. There is more than one use of PAN Card, and here are some of the uses and important points that you must consider using the card appropriately. Stay with us and know all the uses and benefits of PAN Card.
What Is a PAN Card?
PAN is an abbreviation of Permanent Account Number. The 10-digit unique alphanumeric identity number is issued to all taxpayers by the Income Tax Department of India. Every PAN number is unique and different for all individuals.
PAN card uses
Do you plan to buy a car or property, invest in the share market, or even convert Indian currencies to international? You will need one significant thing to perform all these activities: PAN Card.
If you're wondering what is pan card used for and why PAN Card is so important, then here is a detailed list of uses of PAN Card.
Since it has become one of the most important documents in India in recent times, the Income-tax Department introduced the major uses of PAN Card.
1. Filing IT Returns
All people and entities who are qualified for Income tax are supposed to file their IT returns. A PAN card is vital for documenting IT returns and is the essential identity proof for different entities. Therefore, it becomes important for every earning citizen to apply for one.
2. To Open a Bank Account
Every individual or corporation in India is required to have a bank account in order to open an account with any of the public, private, or cooperative banks.
This is done to persuade consumers to create a savings or checking account.
Under the widely publicized Pradhan Mantri Jan Dhan Yojana, any citizen of the nation may create a zero-balance account by just presenting a voter card or other form of identification, such as a PAN card. The PAN Card enables you to enter the digital world by creating a bank account and easily managing your income or savings.
3. Buying & Selling of Motor Vehicles
Another benefit of having a PAN card is the eligibility of a person or entity to initiate transactions of selling or buying any type of vehicle.
PAN is mandatory for a buyer as well as a seller to indulge in any kind of transaction regarding a motor vehicle. The action, especially during the sale or purchase of any vehicle, pre-owned, requires the permission of the RTO of the concerned state.
4. Applying for a Credit or Debit Card
If you want to apply for any of the debit cards or a credit card at any financial institution or bank, providing them with your PAN card details has been made mandatory by the regulatory authority. You will not be issued any card if you do not have a PAN card.
5. Purchase of Jewelry
While going out to buy any type of jewelry that has a value of Rs. 5,00, 000 or more, you will be required to provide your PAN card details when you make the purchase. This is simply done to ensure an individual's identity to prevent illicit activity and have a crime-proof work structure.
6. Making Investments
Investing in shares or stocks is considered to be a wonderful way to grow your wealth and become prosperous.
If any individual is planning to invest in any type of securities, you will need to provide your PAN card details for any transactions that include an amount of Rs. 50,000 or above. This rule is also applicable to bonds, equities, mutual funds, or even debentures.
7. Proof of Identity
A PAN card is accepted as valid proof of identity across the nation; you can also use it as proof of your age.
It is often used as proof of identity, especially while applying for a passport, voter ID, driving license, or even electricity connection.
8. Foreign Exchange
If you plan to travel abroad and feel the need to convert your Indian currency into any foreign currency, you will have to provide the details of your PAN card at the money exchange bureau/bank or any institution where the money is being converted.
9. Property
As per the latest amendments in India, if an individual wants to buy, sell, or rent any property in India, they need to provide their PAN card proof.
If you are buying a property, the PAN details of the buyer along with the seller need to be listed on the agreement and any other required documents to sell the property.
10. Loans
Suppose you are looking to take a loan. In that case, you must remember that all the loan providers, both banks and any other individual lending institutions, will ask you to submit your PAN card details while filling out the loan application.
Be it educational loans or personal loans, all types of loan approval require PAN details.
11. Fixed Deposits
Fixed deposit is one of the safest ways to invest your money and keep it secured. If you want to invest your money in a Fixed Deposit (FD) and if the amount is Rs. 50,000 or more, you must provide your PAN details to the bank to complete the process.
The reason behind this is for the banks to deduct TDS (Tax Deductible at Source) on the FD interest amount.
12. Cash Deposits
If any person makes a cash deposit that includes an amount over Rs. 50,000 at once, the person will need to submit the PAN details for verification.
This is in keeping with the RBI guidelines, which ask the banks to report any large transactions to the RBI.
This is a way to prevent money laundering or illegal trafficking of money.
13. Telephone Connections
For all the new telephone or mobile phone connections, it is compulsory to submit your PAN card details; any private mobile operators might not provide you with a connection if you fail to provide the required documents.
14. Insurance Payments
The directives of the Income Tax Department guide an insurer to provide PAN card details with other documents. This is specifically for those who make an insurance payment that exceeds the amount of Rs. 50,000 a year.
15. Hotel and Restaurant Bills
If you stay at any hotel or need to make payments at a restaurant and the amount is more than Rs. 50,000, the hotel and restaurant might ask you to provide your PAN details. This helps them carry out transparent transactions.
16. Opening Demat Account
A Demat account is mandatory to carry trading of stocks and hence requires the submission of a PAN card. It is also mandatory for any person or entity to open an account, which is used to hold shares in dematerialized form.
Benefits to Income Tax Authority
- PAN card is used for for keeping track of all financial transactions. The Income-tax Authority assesses an individual or companies tax liability. It can also be used in reducing the chances of tax evasion.
- Since the pan card holds the person's name, date of birth, and photograph, it is also accepted as identity proof for its holder.
- The PAN number is a unique alphanumeric 10-digit code that remains unchanged even if the card is lost. Even in the case of opening a bank account of a minor. However, the minor must have a guardian to look after the allotted account.
- It is a helpful way to evaluate the total tax revenue generated by every individual in India.
- The allotted PAN numbers are always unique. They would have their inducted alphanumeric number to each PAN cardholder. This leads to no concerns or misuse of the card, even if the card is lost or misplaced, or even if you have changed the name or address on the card.
- PAN card allows the department to understand the tax slab that applies to every individual in the country. Citizens without PAN cards will be subject to a 20% tax penalty regardless of their tax bracket.
- No individual will not get any additional tax benefits without a PAN. Since the Income-tax Department is directly involved with the PAN card structure, it becomes important to apply for the same.
Above are the main advantages of pan card in various ways now let's understand who can obtain a PAN Card?
Who Can Hold a PAN Card?
According to the Government of India, any legal Indian citizen engaged with various monetary exchanges should get a PAN card. For this, they need to have a deep understanding of the required documents and qualification standards for a PAN card. Given below is a list of Indian residents who can apply for a PAN after completing specific necessities –
1. Individuals
A person who is an Indian occupant can apply for a PAN card. They need to introduce some crucial records like identity proof, validation of date of birth, and address proof. (To look into the sufficient reports, you need to visit the power site of NSDL).
2. Hindu Undivided Family
HUF is an alternate entity. A PAN card application can be in HUF's name, to begin with, financial trades. T
he head (Karta) of the family can apply for a PAN card on behalf of the family by presenting required documents like proof of identity, address, and date of birth, of the family.
They should also provide the father's name and the addresses of all the HUF's coparceners to complete the proceedings. Further, the head of HUF must give an affidavit referring to all of the details presented.
3. Minors
The minimum age for any person to apply for a PAN card is 18 years. In any case, guardians of individuals under 18 can, in certain cases, can apply for PAN on their behalf.
A Permanent Account Number transforms into a required essential for a minor if they are an heir of any property and assuming their parents intend to make interests in their names.
A minor's guardian should introduce their records other than the minor's birth certificate during form submission. Additionally, a minor's Aadhaar number ought to be referred to in the application form.
4. Intellectually disabled individuals
An Intellectually disabled individual can likewise get a PAN card. Agents of such people can apply for their benefit.
Conclusion
If you're satisfied with the pan card benefits and what is the use of pan card, you must understand the importance of getting one. PAN is used to monitor the financial activities of adults and other entities.
Since the Income-tax department of India is focusing on providing a transparent financial system, let us contribute and play our part.
The Indian constitution allows us to claim our rights along with certain duties allotted to us. Following legal means of income and transparent taxation is one of our duties.
Also, we should not use any unfair means that lead to tax evasion or make several PAN cards with one holder's name. Be responsible and pay your taxes on time to contribute to society.
I hope you liked our article on pan card uses, if you have any comments or suggestions do share them in the comments below.