Is it Important to Have a PAN?

Every taxpayer should have a PAN to file your income tax returns. You may even need to get a refund on your taxes so you need to have a PAN Card. The PAN Card is now used as an identity document accepted by most. The PAN number is necessary to conduct most business and individual transactions.

Here is a List of Actions that Require a PAN:

  • You need a PAN when paying direct taxes.
  • If you start a business you need to have a PAN to register it.
  • You need a PAN to pay income tax
  • If you buy or sell immovable property worth more than Rs. 5 lakhs
  • For buying or selling vehicles
  • If you pay more than Rs 25,000 at a restaurant or hotel
  • If you spend more than Rs. 25,000 on foreign travel
  • If you deposit more than Rs. 50,000 in a bank
  • If you pay Rs. 50,000 or more to buy bonds
  • If you buy more than Rs 5 Lakhs in gold jewelry or bullion
  • For all Mutual Funds
  • If you buy more than Rs. 50,000 in shares
  • If you buy insurance policies for more than Rs. 50,000
  • For transferring funds between NRE and NRO accounts.

 

Uses of the PAN Card

  1. The PAN Card can be used as proof of ID throughout the country
  2. It keeps track of tax payments so you don’t end up paying the same taxes again
  3. Tax evasion is minimized as every individual or company entity must have their own PAN
  4. PAN Cards can be used as documentary proof to get LPG, internet connection, telephone/mobile, or electricity connections
  5. PAN can track the financial information right from investments to debts to tax history of everyone

Other Categories Similar to PAN

There are other unique numbering schemes like PAN used for other purposes

  • TAN – Tax Deduction and Collection Account Number – this 10 digit number is assigned to individuals or companies that must collect or deduct tax on payments for TDS (Tax Deducted at Source) which will come under the Income Tax Act.

TAN is quoted to apply for a refund of TDS or TCS challans or other certificates. Failure to do so can attract a fine of Rs. 10,000.

  • TIN (Taxpayer Identification Number) – This 11 digit number is used by dealers, manufacturers and traders to pay Value Added Tax at the state level. The number is quoted for any invoice, orders or quotations by both seller and buyer businesses.

Taxpayers under the Income Tax Act (1961) are also tracked with this number.

Who is Eligible for a PAN?

Income Tax section 139A says the following people must have a PAN

  • Anyone who pays tax or who is legally responsible for paying taxes
  • If you have a business or a practice where you have a turnover of Rs. 5,00,000 in the last assessment year.
  • If you have a Trust
  • If you are in the import or export business and legally responsible for taxes or duties under the Income Tax Act or any other law

When you get a PAN from the Income Tax department, you also receive a PAN Card. The PAN Card is the proof of your PAN allotment and has all the important details as given earlier and you can make copies to submit along with other transactions when required.

If I Don’t Have a PAN Card What Can I do?

If you have taxable income then the following may apply:

  • You will have to pay a flat 30% tax on your profits and wealth. This rule is applicable for individuals, companies, foreigners, international firms or anyone or organization which comes under the tax net.
  • You cannot buy a car or an immovable property over Rs. 10,00,000 or open a bank account.
  • You may not be able to conduct business as PAN is needed for everything from buying land to getting any professional services in India.

Other Utility Documents:

  1. Aadhar Card
  2. Visa
  3. Gas Connection
  4. Gas Booking
  5. Passport
  6. Driving License
  7. Voter ID