PAN REGISTRATION

What is PAN?

A permanent account number (PAN) is a ten-character alphanumeric identifier, issued in the form of a laminated “PAN card”, by the Indian Income Tax Department, to any “person” who applies for it or to whom the department allots the number without an application. It can also be obtained in the form of a pdf if the User doesn’t wish to obtain it physically.

A PAN is a unique identifier issued to all judicial entities identifiable under the Indian Income Tax Act, 1961. The income tax PAN and its linked card are issued under Section 139A of the Income Tax Act. 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 proof of identification.

It is also issued to foreign nationals (such as investors) subject to a valid visa, and hence a PAN card is not acceptable as proof of Indian citizenship. A PAN is necessary for filing income tax returns.

Benefits of Having a PAN Card

1. IT Returns Filing

All individuals and entities who are eligible for Income tax are expected to file their IT returns. A PAN card is necessary for filing of IT returns, and is the primary reason individuals, as well as other entities, apply for one.

2. Identity Proof

PAN card serves a valid identity proof. Other than voter card, Aadhaar card, PAN card is also accepted by all financial institutions and other organisations as an identity proof.

3.Tax Deductions

One of the essential reasons to get a PAN card is for the purpose of taxation.

If the entity or person has not linked the PAN number with his bank account, and the annual interest earnings on savings deposits is more than Rs. 10,000/- then the bank would deduct 30% TDS instead of 10%.

4.Claiming Income Tax Refund

Many times, the TDS deducted from a taxpayer’s income is more than the actual tax that he is supposed to pay. In order to claim excess tax paid, taxpayer has to have a PAN linked to his bank account.

5.Starting a Business

In order to start a business, a company or any other entity mandatorily needs to have a PAN registered in the name of its entity.

Tax Registration Number (TRN) is needed for a business which is obtained only if the entity has a PAN.

6. Opening a Bank Account

All public, private and co-operative banks have made it mandatory for an individual or a company to have a bank account in its name in order to open a savings or current account.

Only under PradhanMantri Jan DhanYojana, a person can open a zero balance account by using voter card or other identity proof.

7.OpeningDemat Account

PAN card is also mandatory for an individual or entity to open a Demat Account, which is needed to hold shares in dematerialized form.

8.Purchase& Sale of Immovable Assets

One of the benefits of pan card is eligibility of an individual or entity to enter into transactions of sale or purchase of assets.

PAN is required to be quoted in the deed made during sale or purchase of any immovable property valued at 10 lakh rupees or more.

9.Foreign Travel

Cash payment related with foreign travel of an amount more than Rs. 50,000/- inclusive of forex purchase requires PAN card

10.Time Deposit

Deposits with post office, co-operative banks, non-banking financial companies, will also need PAN, deposits adding up to Rs. 5 lakh or more every year will require PAN

11.Hotel and Restaurant Bills

Payments more than Rs. 50,000/- for hotel and restaurant bills requires PAN to be given

12.Cash Cards and Pre-Paid Instruments

Cash payment adding up to more than Rs. 50,000/- per year will need PAN to be furnished

13. Purchase or Sale of Goods and Services

Purchase or sale of any good or service for an amount more than Rs. 2 lakh per transaction will require PAN to be furnished

14. Bank Drafts, Pay Orders and Banker’s Cheque

PAN card is needed for Bank Drafts, Pay Orders and Banker’s Cheque with a transaction more than Rs 50000/- in a day. This implies that the transactions more than 50000/- will only need PAN card.

Benefits to Income Tax Authority

1. A PAN card helps the Income-tax Authority in keeping a track of all financial transactions that may be essential in assessing an individual or companies tax liability, it helps in reducing the chances of tax evasion. The pan card has the person’s name, date of birth and photograph and is also accepted as an identity proof for its holder.

2. The PAN number is unique to every entity who holds a PAN card. The name and address may change or the card may get lost or stolen but the PAN number will still remain unchanged. So, the possibility of misuse is minimal.

3. A minor account can be opened easily with the PAN card of his or her guardian

4. It is a useful tool to anticipate the total tax revenue being generated in India

5. It helps in fixing the rate at which an entity should be taxed based on its earnings

Who Can Hold a PAN Card?

Following entities can have a PAN card:

Category	Signatory
Individual	Self
HUF	Karta
Company	Director
Firm/LLP	Partner
AOP/BOI	Authorised Signatory

Linking PAN with Aadhaar

It is mandatory to link an individual’s Aadhaar card with the PAN card if he or she already have an Aadhaar card. The linking will help the nation in solving the problem of multiple PAN cards issued under a single name. It is also compulsory to link them for tax filing in case the user has an Aadhaar card number assigned.

Conclusion

After going through the above-mentioned uses and benefits of PAN card, it will become clear to an individual why having a PAN card is so important for him in his day to day transactions.

Also one should also not use unfair means to avoid taxes and make multiple PAN cards with the same holder name. Be responsible and pay taxes.