PAN card has many uses other than being a way for the IT Department to keep tabs on your financial transactions.
PAN (Permanent Account Number) has become an inseparable part of the identity of an individual today. It is required to be compulsorily quoted in most of the transactions involving more than Rs 50,000. Issued by the Income Tax Department (ITD), PAN is an important tool that helps the Income Tax Department monitor all the financial transactions of an individual and trace any income leaks from the ITR filed by him. Hence, it can effectively help reduce tax evasion.
“If you are looking at buying a property or a car, converting your Indian rupees to foreign currency or investing in the stock market, you will have to quote your PAN in these transactions. However, the PAN card has many uses other than being a way for the IT Department to keep tabs on your financial transactions,” says Chetan Chandak, Head of Tax Research, H&R Block India.
Here they go:
Opening a new bank account
You need to mention your PAN details in the application form while opening a new bank account, whether in a private, public, co-operative or another bank. “Even after your account is opened and active, you will still have to furnish your PAN details for depositing Rs 50,000 or more in your bank account. You may also have to furnish your PAN details while purchasing a draft from the bank or paying for orders for an amount Rs 50,000 or more during any day. Moreover, even while applying for a credit or debit card, you must submit your PAN details,” says Chandak.
Buying and selling property
Buying or selling immovable property requires a lot of money. Therefore, if you want to sell or purchase a property that is worth Rs 5 lakh or more, you are required to submit a copy of your PAN card. In case the said property is a joint property, PAN details of each person are required.
Buying or selling vehicle
Submitting a copy of PAN card is compulsory, if you are planning to buy or sell a vehicle whose cost is more than Rs 5 lakh.
New phone connection
While planning to get a new phone connection either for home or business, it is mandatory to submit your PAN details when the installation of the cellular phone or telephone is done. “The Government of India has mandated all the telecom companies to get PAN details of each applicant to reduce terrorist activities and extortion cases,” informs Chandak.
A lot of people invest in lump sum amount in ELSS funds to save tax. Therefore, disclosing your PAN details while investing money in mutual funds becomes necessary, when you are purchasing units worth Rs 50,000 or more. You also need to mention your PAN details if you are buying or selling securities over and above Rs 1 lakh.
Make sure that you carry your PAN card while you are travelling. In case you are travelling in a foreign country and you spend Rs 25,000 or more in a day, you are required to submit a copy of your PAN details.
Staying at a hotel
If you are staying at a hotel or a restaurant, in India or a foreign country, and your total bill exceeds Rs 25,000, you will be required to submit a copy of your PAN card. Therefore, always ensure that you carry your PAN card with you to all the places that you go.
Payment towards a dealer or an entity
You will be required to submit your PAN details if you are
(i) making a payment of more than Rs 50,000 to a company while acquiring or buying shares, bonds or debentures issued by them
(ii) payment towards the RBI
(iii) aggregate payment made towards premium of Rs 50,000 or above within a year for the purchase of a life insurance policy
(iv) making payments to a dealer of Rs 5 lakh or more or payment towards a bill of Rs 5 lakh or more for buying bullion jewellery.
Opening account with share broker
You are required to open an account with a share broker for trading in the share market. “For this, it is mandatory for you to submit your PAN details. If you do not provide your PAN details, your application will be rejected,” says Chandak.
All loan providers, be it banks or any other lending institutions, require you to submit your PAN details at the time of applying for a loan. From education loans to personal loans, you will need the PAN details for the loans to be approved.
Applying for a credit or debit card
PAN is required to be quoted while applying for a debit or credit card. Non-quoting of PAN can result in the rejection of the card and in turn reduce your credit score. This will reduce the chances of getting a loan or credit card in the future.