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The importance of having a PAN card

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THE IMPORTANCE of having a permanent account number (PAN) has grown manifold over the years and it is now a vital element of any financial transaction.


Importance of the card: Simply speaking, PAN is a 10-digit unique alphanumeric number, issued by the income tax department to a taxpayer. The categories of people required to apply for a PAN card to the income tax authorities are provided in the Income Tax Act and include those whose total income is higher than the amount not chargeable to tax, and those carrying on business or profession where the total sales or gross receipts exceed Rs 5 lakh.

The PAN card of an individual contains his name, father's name, date of birth, PAN, signature and photograph. An individual can be allotted only one PAN.


How it works: A PAN enables the income tax department to link all transactions and documents of the individual. These include income tax/wealth tax returns, tax payments, tax de ducted at source (TDS), assessments, tax demands/arrears and correspondences, to name a few. Therefore, a PAN card acts as an identifier for the individual with the tax department.

PAN also facilitates the easy retrieval of information and matching of information relating to investments, loans and other business activities of taxpayers collected through different sources.


Application for PAN: Application for a new PAN can be made in the specified form, either online or physically, along with the documents prescribed by the income tax department. The status of the application made can also be tracked online on the income tax de partment's website. Recently, the Central Board of Direct Taxes introduced two separate PAN application forms for allotment of PAN, with effective from November 1, 2011, for Indian citizens (Form 49A) and individuals who are not citizens of India (Form 49AA).


Quoting of PAN: In addition to quoting of PAN on income tax returns, any correspondence with the income tax department and tax challans, the number is also required to be quoted on documents pertaining to specified financial transactions, which include: Sale or purchase of any immovable property valued at Rs 5,00,000 or more Sale or purchase of a motor vehicle Time deposits exceeding Rs 50,000 with a bank or post office respectively Contract of a value exceeding Rs 1,00,000 for sale or purchase of securities Opening a bank account Making an application for installation of a telephone/mobile connection Payment to hotels and restaurants against their bills for an amount exceeding Rs 25,000 at any one time Deposit in cash aggregating Rs 50,000 or more with a bank during any one day Payment in cash in connection with travel to any foreign country of an amount exceeding Rs 25,000 at any one time Updating PAN details: It is in the interest of the taxpayer to obtain the correct PAN/make changes in the PAN allotted, at the earliest, in order to get the relevant credit of taxes paid during the year and avoid receiving demand notices from the income tax department.

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  7. SBI Magnum Tax Gain Scheme 1993
  8. Sundaram Tax Saver

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