Some persons fear having the PAN card. They think that they have to pay Income-tax and file returns once they have the PAN card. This article is an attempt at dispelling all fears and apprehensions and informing them about the many benefits of having the key PAN card.
There is no necessity of paying the Income-tax by just having the PAN card. One has to pay Income-tax, only when they are earning more than the prescribed limit. A PAN number is compulsory for those who earn more income and need to file returns.
There are so many people who are not paying Income-tax even though they enter into large transactions or big businesses and evade tax.The PAN card is useful for Income-tax officials to identify such persons and to curb black money. Through the PAN card facility, the officials can find out the total financial transactions done in the country in a year.
PAN card is compulsory for the following transactions
Mentioning the PAN number is compulsory for the following money transactions as per 114(B) of Income-Tax Act.
The PAN number has to given by those persons who are buying gold ornaments worth Rs. 2 lakhs or more. The rule applies for selling or buying goods worth Rs. 2 lakhs or more.
The number is compulsory for the persons who want to deposit an amount of Rs.50,000 or more in banks. Not only banks, the rule also applies for cooperative banks and some financial organisations. However, the rule was earlier applicable for the post offices, too. Now it is not applicable for deposits in post offices.
Giving PAN number in banks is compulsory. If the annual income from the deposits of the customers is more than Rs.10,000, the banks will make a cut of 20 percent (TDS) in it and give it to the Income-tax department. If any customer gives his PAN number, the cut will be restricted to 10 percent. Otherwise, the banks won't give the TDS certificate even after making a 20 percent cut. They also can't get refund from the Income-tax department later. Thus, giving the PAN number is beneficial for the bank customer.
Buying of any motor vehicle except two wheelers
For all property transactions worth more than Rs.10 lakhs, PAN card is necessary. Earlier, the limit was Rs.5 lakhs.
Previously, giving the PAN number was compulsory while opening an account in any bank. Now, the number is not necessary for opening of ordinary savings accounts in any bank.
The PAN number is compulsory for all bank drafts, pay orders and bankers cheques worth more than Rs.50,000.
Are you planning for any tour? The PAN number is compulsory if you pay more than Rs.50,000 to tourist operators or for booking of hotel rooms or flight tickets.
For prepaid services or cash card payments, if the money involved is more than Rs.50,000, the PAN number is necessary.
Earlier, there was a rule of giving PAN number while getting landline or cell phone connections. Now, the rule has been abolished.
While applying for credit cards
For buying mutual fund units, if the money involved is more than Rs.50,000, the PAN number is necessary.
PAN number is compulsory for opening a demat account. It has to be given for all buying and selling of unlisted company shares worth more than Rs.1 lakh.
For buying of debentures, bonds and RBI bonds valued more than Rs.50,000, PAN number is necessary.
PAN number is compulsory if the annual Life insurance policy's premium is more than Rs.50,000.
PAN number for children too!
The PAN number is compulsory for the children, too, in certain cases. If any large investment is made in the name of a minor, giving the PAN number of the child is compulsory. Same is the case if the nominee is a minor for buying stocks and making investments. It is assumed that the children have no income. So,the government considers the income got from the investments made in the name of minors as the parental income: The related Income-tax has to be paid by the parents themselves. However, the rule is not applicable if the child is physically handicapped. Similarly, the income associated with children, who lost both their parents, is not added to their guardians' earnings.
NRIs too must possess PAN number
NRIs should file Income-tax returns if they are getting income that implies paying Income-tax in India. For paying the same, PAN number is compulsory. It is compulsory for transactions in Indian stock markets and investments in mutual funds. It has to be given for all property transactions. Regarding all other financial transactions, the same rules apply for them which are applicable to Indians.
Misusing PAN number
There is much scope for misusing of your PAN number and too many such cases are already reported in the media. One gold merchant collected the PAN number of a person from a train reservation chart and used it for his large gold transactions later. In such cases, the Income-tax authorities may serve notices to such persons asking them to furnish all the details regarding the transactions.
Several persons use the PAN card as a proof of identity. Some persons submit the card for getting SIM card of cell phones too. The tax payers can know about fake transactions made by others with their PAN number by submitting Form 26 AS. However, others can't have the facility. The suggestions of the experts are that one has to give the PAN number only in cases where the government made its mention compulsory.
About PAN card
The details that are mentioned on the PAN card are full name of the card holder along with surname, father's name, date of birth, signature and photo.
Every digit of PAN number has certain meaning.
PAN Number : BJQPP5524G
First three letters : Random letters which can be anything from AAA to ZZZ.
Fourth place : P for person, C for company, H for Hindu undivided family, F for firm, A for association for persons, T for trust, B for body of individuals, L for local authority, J for juridical person and G for government.
Fifth Place : It is the first letter of the surname of the card holder.
Next four places can be anything from 0001 to 9999.
The last one is a check digit