What is a Pan Card? (What are the Uses and Benefits of a Pan Card)
Permanent Account Number, or PAN, is a number provided by the Income Tax Department under the Income Tax Act of 1961. It is a distinct 10-digit alphanumeric number written on a plastic card that has been laminated. Indians receive it, mostly those who pay taxes. One PAN number, which acts as the main key for data storage, is used to capture all of a person’s tax-related information.
It is prohibited for two people or tax-paying entities to have the same PAN.
The Income Tax Department issues a PAN Card along with the PAN that is assigned to an organisation. While your PAN is a number, your PAN Card is a physical card that also has your name, date of birth (DoB), and a photograph in addition to your PAN number.
Different types of Pan Cards
PAN cards are available in a variety of formats, each of which performs one of the following functions:
- PAN card for organisations and businesses
- Cooperative Society and Trust PAN Card
- Individual taxpayer PAN card
- PAN card for businesses or partnerships
Who May Request a PAN Card?
The organisations listed below must possess a PAN card:
- Those whose income exceeds the threshold for their tax bracket.
- People who make taxable income for the benefit of others, such as minors.
- Those who are employed or own a business with an annual revenue or sales threshold of more than Rs. 5 lakh.
- Those who have registered under the Central Sales Tax Act, the general sales tax law of a union territory or a state.
- Anyone who conducts financial transactions for which a PAN card must be provided.
- Returns for charitable trusts are required by Section 139 (4A).
- Those that need an import/export code are importers and exporters.
- Those who are subject to excise taxes.
In addition to cardholders and foreigners covered by the Income Tax Act of 1961, NRIs (Non-Resident Indians), PIOs (Person of Indian Origin), OCIs (Overseas Citizens of India), and cardholders can also receive a PAN card. Parents may also apply for a PAN card on behalf of their minor children.
PAN Card Uses
- The PAN needs to be quoted when paying direct taxes.
- Taxpayers are required to submit their PAN on their income tax forms.
- When registering a business, PAN information is required.
- For many financial procedures, PAN information is necessary. One must provide their PAN card information for the following financial services:
- Buying or selling an immovable property for at least Rs. 5 lakh
- A vehicle other than a two-wheeler is purchased or sold.
- payments paid to restaurants and hotels that are more than Rs.25,000
- payments made to cover expenses for international travel. You must provide your PAN if the amount in this case exceeds Rs. 25,000.
- Over Rs. 50,000 in payments for bank deposits
- Acquisition of bonds costing at least Rs. 50,000
- purchase of an insurance policy for Rs. 50,000 or more
- Purchasing mutual funds
- payments made for the purchase of jewellery and gold bullion totaling more than Rs. 5 lakh
- To send money out of India
- Making a transfer of funds from one NRE account to another
Benefits of PAN Card
- IT Return Filing: IT returns are required to be filed by all persons and companies who are qualified to pay income tax. The main reason people and other entities register for a PAN card is because it is required to file IT returns.
- Identity proof: A valid identity evidence is a PAN card. All financial institutions and other entities accept PAN cards in addition to voter and Aadhaar cards as identification documents.
- Tax deductions: Obtaining a PAN card is vital for tax purposes. If an organisation or individual does not link their PAN number to their bank account and their yearly interest on savings deposits exceeds Rs. 10,000, the bank will take 30% TDS instead of 10%.
- Making a claim for an income tax refund: Frequently, the TDS taken from a taxpayer’s income exceeds the real tax that he is required to pay. A PAN that is connected to the taxpayer’s bank account is required in order to claim any excess taxes paid.