Apart from the many uses of a PAN card, it is also considered to be a very important document that every individual must have. Issued by the Income Tax Department of India, it is essentially a laminated card that contains a host of important information. This includes the card holder’s Permanent Account Number (PAN), their full name, their father’s name, their photo and signature, and their date of birth.
The Permanent Account Number in a PAN card is used by the Income Tax Department to track and link a host of financial transactions. By being able to track the various financial transactions of an individual, the department can effectively detect and prevent tax evasions. It also makes it easy for the holder of the card to retrieve information like Tax Deducted at Source (TDS) with respect to the various financial transactions that they’ve entered into.
Now that you’ve gotten an idea of the importance of this document, you’re probably wondering what the use of a PAN card is, right? Here’s an overview of some of the many uses of this card.
Submitting a copy of your PAN card is necessary if you wish to reduce the impact of Tax Deducted at Source (TDS). Without a PAN, the rate at which TDS is deducted for resident individuals increases to 20% instead of the usual 10%. That’s not all. You would need to possess a valid PAN to be able to file an Income Tax Return (ITR), which is mandatory if your total taxable income exceeds the basic exemption limit.
This is one of the many uses of a PAN card. Producing a PAN card is mandatory if you’re planning to open a bank account other than an account that comes under the Pradhan Mantri Jan Dhan Yojana. Also in the case of a demat account or a rupee-denominated Non-Resident Ordinary (NRO) account, you would need to furnish your PAN card to open one.
If you wish to make certain financial transactions that are above ₹50,000 in a financial year, furnishing your PAN card details becomes mandatory. Here’s a quick look at the list of transactions.
Cash deposits of more than ₹50,000 in a bank account
Payment of hotel and restaurant bills of more than ₹50,000 in cash
Purchase of mutual funds, bonds and debentures of more than ₹50,000 in value
Issuance of pay orders, demand drafts and banker’s cheque of more than ₹50,000
Life insurance premium payments of more than ₹50,000 in a financial year
Cash payments of more than ₹50,000 made towards purchase of foreign currencies, air tickets and other travel-related expenses
Payments exceeding ₹50,000 made towards e-wallets, prepaid cards and gift cards
This is another one of the most important uses of a PAN card. Quoting of your PAN is mandatory if you’re purchasing or selling the following.
Goods or services whose value exceeds ₹2 lakhs
Assets including immovable property whose value exceeds ₹10 lakhs
Vehicles except two-wheelers
Securities whose value exceeds ₹1 lakh
Gold and Bullion whose value exceeds ₹5 lakhs
If you’re planning to either remit funds outside India, you would have to furnish your PAN card. Even if you wish to transfer funds from a Non-Resident External (NRE) account to a Non-Resident Ordinary (NRO) account, you would have to quote your PAN.
In addition to the above, a major use of a PAN card is that it serves as a valid proof of your identity.