PAN as we know or Permanent Account Number is non-duplicate, unique number of 10 digits. The regulatory authority is the Income Tax Department. People usually talk about the advantages of having a PAN but fail to understand that it is a necessity. If you wish to carry out a financial transaction of any nature, the PAN is mandatory nowadays. Whether it is for buying or selling a property or submitting an official fee or even buying or selling of vehicles, you have to mention PAN these days. It provides a transparency of transaction and tax for the government.
The fact that this number remains unchanged even with the change of address throughout India makes it indispensable for any transaction in any part. One must necessarily quote PAN on one’s income return. Since January 2005 quoting pancard status on challan for the payments has been made compulsory. The PAN was introduced by the government to calculate the total tax generated in the country so that the rate of taxation can be fixed in a better manner.
The advantages of having a PAN card are as follows:
- As an Identity Proof
The PAN card carries the photograph, name and date of birth. Since a PAN card is unique for every holder, it is dependable and nationally recognized. Hence is widely accepted as an identity of a person.
- Rate of Tax
PAN card will save you from lots of trouble such as forget the worry of tax rate. If you have a PAN card you will not be unnecessarily taxed at varying rates. Taxation becomes simple.Since for paying any tax one needs to have a PAN card this also reduces the risk of paying the tax twice.
- While opening a new bank account
Having a PAN card is now mandatory for opening a new saving or current bank account, irrespective of the type of bank; public, private, cooperative or other banks. Some banks also ask for the PAN in the case of mutual funds or insurance. It can also be very beneficial for a minor wanting to open an account, in such a scenario PAN card of the guardian is considered valid.
- Applying for credit or debit card
Quoting your PAN is necessary while applying for a debit or credit card. Direct rejection of the plea would be done if failed to produce the PAN card. It will in turn affect the plan of getting a credit card. In some cases, the limit of credit or getting a loan would be a big problem.
- New Salary Account
PAN card is the most important document in the checklist of the documents to be produced to the company working in. The salary account has the PAN number reference to it.
- Insurance payment
While making ant payment to the insurance companies, it is mandatory to furnish PAN details for amount 50,000 and more in a year.
- Purchasing or selling off assets
If a person needs to buy any vehicle or property for which he/she needs to pay tax to the government, it is mandatory to produce the PAN card details in case the vehicle or property cost more than five lacs. Even in the case of joint property, the PAN details of each person are needed. Jewellery is another asset which a person thinks of having nowadays. So, any high-value jewellery purchases for an amount more than 5 Lacs also requires the buyer to provide PAN number.
- Fixed or cash deposit
The permanent account number is also a necessity while opening a fixed deposit (FD) account or cash deposit of amount more than Rs. 50,000 at any bank.
- New telephone connection
Getting a cellular connection is a great difficulty without a PAN nowadays. The government of India has asked all the telecom companies to allow new connections only when a PAN card is produced. They have also requested to maintain the PAN details of all the connection holders. This is an attempt of the government to keep a check on crimes happening due to landlines and cell phones. This is also a step against terrorism.
- Investing in securities
Mutual Funds, Equities, debentures or bonds also require the investor’s PAN card details.
PAN card is not just a beneficial document but in fact a necessary document for carrying any financial transactions.