PAN stands for Permanent account number which consists of 10 digits alphanumeric characters. It is issued in the form of the layered card under the Income-tax act, 1961 by the Income Tax department under the supervision of CBDT (Central Board for Direct Taxes). It is an electronic system in which all the tax-related information of a company or a person is recorded against a single PAN number.
PAN is compulsory for financial transactions like professional fees or taxable salary, purchase or sale of any assets above specified limits, buy mutual funds and so on.
1. Tax Deduction
One of the most important reasons for obtaining a PAN card is for Taxation purposes. In case you haven’t linked your PAN with your bank account then the bank will deduct 30% TDS instead of 10% of your annual interest earnings on savings deposits exceeds Rs. 10,000/-
The Indian government made PAN mandatory for the companies as per the Income Tax Act, 1961 implemented in 2010. For starting up a business a company also has to provide their TRN (Tax Registration Number) to whoever is paying them and TRN (Tax Registration Number) can only be obtained if you have a PAN.
3. Claiming Refunds from the Income-tax department
It is mandatory to file an Income tax return every year as a responsible citizen of a country. The return document is used for many purposes like checking your credibility during a bank loan. You will be eligible for a refund if your TDS is higher than the actual amount you need to pay as an Income tax return. If you are eligible for the refund then you need a PAN card linked to your bank account to claim your refund. Therefore, PAN is necessary to claim a refund.
4. Opening a Bank Account
According to the rules, you cannot open a bank account if you don’t have a PAN card. This rule is not applicable when you are opening a zero balance account under the prime minister Jan Dhan Yojna where you can use the Ration card and ID card as a proof of your identity.
5. Insurance/Making investments/Buying RBI Bonds
A norm named KYC (Know your customer) was introduced under the prevention of Money Laundering act to make sure that the funds used for investments are not illegal and came from the legal source. Before you invest you first have to get KYC by filling a form available on AMFI (Association of Mutual fund of India) website, in addition to it, attach a self-attested copy of your PAN card and then the KYC document is accepted.0020
6. Buying Foreign Currency
For purchasing foreign currency above Rs. 50,000 or more Under the foreign exchange management act, PAN card is required.
7. Buying a Car
If you are buying and selling a four-wheeler then it is mandatory to have a PAN. Also, it is mandatory if you want to take a car loan. IN case you are buying a second-hand car then, in that case, it is not mandatory. Instead of PAN, you can use Form 60.
Aadhar card of the applicant
Photo id proof
Passport size photograph of the applicant
Partnership deed in case of a partnership
MOA, AOA, and COI in case of a company
1. What is a PAN?
PAN (Permanent Account Number) is a ten-digit unique alphanumeric number issued by the income tax department. It is issued in the form of a laminated plastic card. It is compulsory for financial transactions like professional fees, purchase or sale of any asset and so on.
2. What are the advantages of obtaining PAN (Permanent account number) and PAN card?
A PAN has been made compulsory for every transaction with the Income-tax department. It is also compulsory for various other transactions such as the opening of a bank account, Deposit of cash in a bank account, Opening a Demat account, dealing in securities, etc. It is a valuable means of photo Id accepted by all the government and Non-government institutions in the country.
3. Can I file my return of income without quoting PAN?
No, you can't file a return of income without quoting PAN. It is mandatory to quote PAN in all challans for making a tax payment, correspondence with the Income Tax Department, etc.
4. What is the validity of PAN?
If obtained once PAN is valid for the lifetime of PAN-holder throughout India. It is not affected by any change in address or change of assessing officer. However, if any change in the PAN database is required then it should be intimated to the Income-tax department by providing the details in the form of Request for New PAN card/changes or correction in PAN Data.
5. Can a person hold more than one PAN?
No, a person cannot hold more than one PAN card. If a person is having more than one PAN a penalty of Rs. 10,000 will be levied under section 272B of the Income-tax Act, 1961. In case a person is allotted more than one PAN then he should immediately surrender the additional PAN card.
6. What should I do if my PAN card is lost?
If your PAN card is lost and you wish to have a new PAN card for existing details then you can apply for duplicate PAN card by submitting the form in favor of “Request for New PAN card/changes or correction in PAN Data” along with the copy of FIR. If your PAN card is lost and you don’t remember your PAN then, in that case, you can know your PAN by using "Know your PAN" facility provided by Income Tax Department. This facility can be availed from website www.incometaxindiaefilling.gov.in
7. How long does it take to get a PAN Card?
New PAN card takes approximately 15 to 20 working days whereas correction or replacement card takes around 30 to 40 working days. However, this may vary depending on the authorities.
8. Who should apply for a PAN card?
Any person who tends to enter into financial and economic transactions where quoting of PAN is necessary and all existing assesses or taxpayers or any person who is required to furnish a return of Income on behalf of self or others must obtain a PAN.
9. What are the documents required to apply for a new PAN card?
Elector’s photo identity card
Photo Id card issued by central government or state government
Bank account statement
Property Registration document
Marriage certificate issued by the registrar of Marriages
10. What is form 49A?
It is an application for the allotment of PAN (Permanent account number) in the case of Indian Citizen/Indian companies incorporated in India or unincorporated entities formed in India.