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Want to Achieve any of the below Goals upto 80% faster?
Dream Home
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Dream Car
Retirement
1st Crore
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 1L+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below
Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below
Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Uses of PAN Card
Uses of PAN Card
Aug 5, 2024
Introduction
The Permanent Account Number (PAN) is a crucial identification number issued by the Income Tax Department under the Income Tax Act, 1961. It is a unique 10-digit alphanumeric identifier printed on a laminated plastic card, making it easily portable and durable. This identifier is essential for various financial transactions and is mandatory for individuals, firms, companies, associations, Hindu Undivided Families (HUFs), trusts, and other entities whose income is taxable under the Income Tax Act, 1961. In this comprehensive guide, we will explore the myriad uses and benefits of a PAN card, the structure of the PAN number, and the importance of obtaining and maintaining this essential document.
Importance and Uses of PAN Card
Financial Transactions and Banking
Purchasing or Selling Vehicles: Except for two-wheelers, a PAN card is required for the purchase or sale of vehicles.
Opening Bank Accounts: PAN is necessary for opening a bank account, whether it is a savings or current account. Additionally, PAN details are required for time deposits exceeding ₹50,000 or aggregating to more than ₹5,00,000 during any financial year with:
Any bank or cooperative bank
Post Office
Nidhi Companies as per the Nidhi Companies Act, 2013
Non-banking financial companies (NBFCs)
Credit Card Applications: PAN is required when applying for a credit card.
Demat Account Opening: To open a Demat account with any depository, custodian of securities, or any entity registered with the Securities and Exchange Board of India (SEBI), a PAN card is mandatory.
High-Value Transactions
Cash Payments Over ₹50,000: PAN is required for cash payments exceeding ₹50,000 to:
Hotels or restaurants against a single bill
Travel to foreign countries or payments for purchasing foreign currency
Bank drafts, pay orders, or banker’s cheques from a bank or cooperative bank
Payments Over ₹50,000: PAN is needed for payments exceeding ₹50,000 to:
Mutual fund companies for purchasing units
Corporate entities or public institutions for buying debentures or bonds
The Reserve Bank of India (RBI) for purchasing bonds issued by them
Cash Deposits Over ₹50,000: For single-day cash deposits exceeding ₹50,000 with banks or cooperative banks, PAN is required.
Prepaid Payment Instruments: Payments exceeding ₹50,000 in a financial year for one or more prepaid payment instruments, as defined by the RBI guidelines, require PAN details.
Insurance and Investments
Insurance Premium Payments: PAN is necessary for paying life insurance premiums totaling more than ₹50,000 in any financial year.
Buying and Selling Securities: PAN is required for transactions involving the purchase or sale of securities (other than shares) exceeding ₹100,000 per transaction.
Buying and Selling Shares: For purchasing or selling shares of a company not listed on a recognized stock exchange exceeding ₹100,000 per transaction, PAN is mandatory.
Real Estate and Other Transactions
Real Estate Transactions: PAN is required for buying or selling immovable property valued over ₹10,00,000 or as valued by a stamp valuation authority.
Goods and Services Transactions: For buying or selling goods or services exceeding ₹2,00,000 per transaction, PAN is necessary.
Minors and Guardians
Minor’s PAN Usage: A minor can use the PAN of their parent or guardian if they do not have any income chargeable to tax.
Form No 60 Declaration: If a person without a PAN card enters into any of the aforementioned transactions, they must submit a declaration in Form No 60.
Structure of the PAN
The PAN is structured as a 10-character alphanumeric code, with the first five and the tenth characters being alphabetic, and the remaining four characters numeric. Here is a breakdown of the PAN structure:
First Three Characters: Alphabetic, ranging from AAA to ZZZ.
Fourth Character: Indicates the PAN holder’s status:
“P” for Individual
“T” for Trust
“C” for Company
“G” for Government Agency
“H” for Hindu Undivided Family
“A” for Association of Persons
“B” for Body of Individuals
“J” for Artificial Juridical Person
“L” for Local Authority
“E” for Limited Liability Partnership
“F” for Partnership Firm
Fifth Character: Represents the PAN holder’s last name or surname in the case of individuals, or the first character of the PAN holder’s name for non-individuals.
Sixth to Ninth Characters: Numeric, ranging from 0001 to 9999.
Tenth Character: Alphabetic check digit.
Application Process for PAN
Online Application
PAN applications can be submitted online through two representative agencies authorized by the Income Tax Department: UTI Infrastructure Technology And Services Limited (UTIITSL) and National Securities Depository Limited (NSDL). These agencies process the applications, but the allotment of the PAN number remains with the Income Tax Department. The forms used are:
Form 49A: For Indian residents.
Form 49AA: For non-residents, including foreign companies.
Mandatory Requirements for PAN
The following entities are required to obtain a PAN:
Income Exceeding the Taxable Limit: Individuals whose total income or the total income of any other person for whom they are assessable exceeds the threshold amount not chargeable to tax.
Charitable Trusts: Required to furnish returns.
Business or Profession: Individuals carrying on any business or profession with total sales, turnover, or gross receipts likely to exceed ₹5,00,000 in any financial year.
Import Export Code: Individuals obtaining an Import Export Code by Importer/Exporter.
Tax Deduction at Source (TDS): Individuals entitled to receive any sum or income after TDS.
Excise Duty: Individuals liable to pay excise duty, producers or manufacturers of excisable goods, or registered persons of private warehouses storing excisable goods.
Service Tax: Individuals providing services liable to pay service tax.
Sales Tax: Individuals registered under the Central Sales Tax Act or General Sales Tax law of the relevant state or union territory.
Financial Transactions: Individuals intending to engage in specified financial transactions where PAN is mandatory.
Conclusion
The PAN card is an indispensable document in India, serving not only as a critical identification number for tax purposes but also as a necessary tool for a wide range of financial and legal transactions. Understanding the uses and structure of the PAN card, along with the application process, is essential for compliance and efficient financial management. Whether you are an individual, a business entity, or a non-resident engaged in Indian financial activities, ensuring that you have a valid PAN card and using it correctly is vital for seamless transactions and regulatory compliance.
Introduction
The Permanent Account Number (PAN) is a crucial identification number issued by the Income Tax Department under the Income Tax Act, 1961. It is a unique 10-digit alphanumeric identifier printed on a laminated plastic card, making it easily portable and durable. This identifier is essential for various financial transactions and is mandatory for individuals, firms, companies, associations, Hindu Undivided Families (HUFs), trusts, and other entities whose income is taxable under the Income Tax Act, 1961. In this comprehensive guide, we will explore the myriad uses and benefits of a PAN card, the structure of the PAN number, and the importance of obtaining and maintaining this essential document.
Importance and Uses of PAN Card
Financial Transactions and Banking
Purchasing or Selling Vehicles: Except for two-wheelers, a PAN card is required for the purchase or sale of vehicles.
Opening Bank Accounts: PAN is necessary for opening a bank account, whether it is a savings or current account. Additionally, PAN details are required for time deposits exceeding ₹50,000 or aggregating to more than ₹5,00,000 during any financial year with:
Any bank or cooperative bank
Post Office
Nidhi Companies as per the Nidhi Companies Act, 2013
Non-banking financial companies (NBFCs)
Credit Card Applications: PAN is required when applying for a credit card.
Demat Account Opening: To open a Demat account with any depository, custodian of securities, or any entity registered with the Securities and Exchange Board of India (SEBI), a PAN card is mandatory.
High-Value Transactions
Cash Payments Over ₹50,000: PAN is required for cash payments exceeding ₹50,000 to:
Hotels or restaurants against a single bill
Travel to foreign countries or payments for purchasing foreign currency
Bank drafts, pay orders, or banker’s cheques from a bank or cooperative bank
Payments Over ₹50,000: PAN is needed for payments exceeding ₹50,000 to:
Mutual fund companies for purchasing units
Corporate entities or public institutions for buying debentures or bonds
The Reserve Bank of India (RBI) for purchasing bonds issued by them
Cash Deposits Over ₹50,000: For single-day cash deposits exceeding ₹50,000 with banks or cooperative banks, PAN is required.
Prepaid Payment Instruments: Payments exceeding ₹50,000 in a financial year for one or more prepaid payment instruments, as defined by the RBI guidelines, require PAN details.
Insurance and Investments
Insurance Premium Payments: PAN is necessary for paying life insurance premiums totaling more than ₹50,000 in any financial year.
Buying and Selling Securities: PAN is required for transactions involving the purchase or sale of securities (other than shares) exceeding ₹100,000 per transaction.
Buying and Selling Shares: For purchasing or selling shares of a company not listed on a recognized stock exchange exceeding ₹100,000 per transaction, PAN is mandatory.
Real Estate and Other Transactions
Real Estate Transactions: PAN is required for buying or selling immovable property valued over ₹10,00,000 or as valued by a stamp valuation authority.
Goods and Services Transactions: For buying or selling goods or services exceeding ₹2,00,000 per transaction, PAN is necessary.
Minors and Guardians
Minor’s PAN Usage: A minor can use the PAN of their parent or guardian if they do not have any income chargeable to tax.
Form No 60 Declaration: If a person without a PAN card enters into any of the aforementioned transactions, they must submit a declaration in Form No 60.
Structure of the PAN
The PAN is structured as a 10-character alphanumeric code, with the first five and the tenth characters being alphabetic, and the remaining four characters numeric. Here is a breakdown of the PAN structure:
First Three Characters: Alphabetic, ranging from AAA to ZZZ.
Fourth Character: Indicates the PAN holder’s status:
“P” for Individual
“T” for Trust
“C” for Company
“G” for Government Agency
“H” for Hindu Undivided Family
“A” for Association of Persons
“B” for Body of Individuals
“J” for Artificial Juridical Person
“L” for Local Authority
“E” for Limited Liability Partnership
“F” for Partnership Firm
Fifth Character: Represents the PAN holder’s last name or surname in the case of individuals, or the first character of the PAN holder’s name for non-individuals.
Sixth to Ninth Characters: Numeric, ranging from 0001 to 9999.
Tenth Character: Alphabetic check digit.
Application Process for PAN
Online Application
PAN applications can be submitted online through two representative agencies authorized by the Income Tax Department: UTI Infrastructure Technology And Services Limited (UTIITSL) and National Securities Depository Limited (NSDL). These agencies process the applications, but the allotment of the PAN number remains with the Income Tax Department. The forms used are:
Form 49A: For Indian residents.
Form 49AA: For non-residents, including foreign companies.
Mandatory Requirements for PAN
The following entities are required to obtain a PAN:
Income Exceeding the Taxable Limit: Individuals whose total income or the total income of any other person for whom they are assessable exceeds the threshold amount not chargeable to tax.
Charitable Trusts: Required to furnish returns.
Business or Profession: Individuals carrying on any business or profession with total sales, turnover, or gross receipts likely to exceed ₹5,00,000 in any financial year.
Import Export Code: Individuals obtaining an Import Export Code by Importer/Exporter.
Tax Deduction at Source (TDS): Individuals entitled to receive any sum or income after TDS.
Excise Duty: Individuals liable to pay excise duty, producers or manufacturers of excisable goods, or registered persons of private warehouses storing excisable goods.
Service Tax: Individuals providing services liable to pay service tax.
Sales Tax: Individuals registered under the Central Sales Tax Act or General Sales Tax law of the relevant state or union territory.
Financial Transactions: Individuals intending to engage in specified financial transactions where PAN is mandatory.
Conclusion
The PAN card is an indispensable document in India, serving not only as a critical identification number for tax purposes but also as a necessary tool for a wide range of financial and legal transactions. Understanding the uses and structure of the PAN card, along with the application process, is essential for compliance and efficient financial management. Whether you are an individual, a business entity, or a non-resident engaged in Indian financial activities, ensuring that you have a valid PAN card and using it correctly is vital for seamless transactions and regulatory compliance.
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