PAN or Permanent Account Number is a ten-digit alphanumeric number issued by the Income Tax Department to an assessee. PAN enables the taxman to link transactions of the person. These include tax payments, TDS (tax deducted at source)/TCS (tax collected at source) credits and income tax returns. In other words, PAN acts as an identifier for the person with the Income Tax Department. Quoting of PAN is mandatory for filing of income tax return (ITR). Besides, furnishing of PAN card details is also mandatory for carrying out specific tasks such as sale or purchase of immovable property valued at Rs 5 lakh and above, according to the Income Tax Department's website - incometaxindia.gov.in.
Here are 10 things to know about the latest PAN rules and why you need a PAN card:
Importance of PAN card
1. Quoting of PAN is also required for setting up a time deposit - or fixed deposit - exceeding Rs 50,000 with a financial institution. Also, a cash deposit exceeding Rs 50,000 in a post office savings account requires PAN, according to the taxman.
2. Payment to hotels and restaurants against bills above Rs 25,000 at any one time requires furnishing of PAN card details. (Read: How to link PAN with State Bank of India account)
3. Furnishing of PAN is also mandatory for a contract valued above Rs 1 lakh for sale or purchase of securities, and payment of Rs 50,000 or more to a mutual fund for purchase of its units.
PAN card rules for taxpayers
4. PAN is required for payment in cash for purchase of a bank draft, pay order or banker's cheque for an amount of Rs 50,000 or more in a day, according to the Income Tax Department.
5. The personal identification number issued by the Income Tax Department is also mandatory for deposit of cash amount to Rs 50,000 and above in a bank in a day.
6. Quoting of PAN is also compulsory for making an application to obtain a credit or debit card.
7. Payment of an amount of Rs 50,000 or more to a company for acquiring its shares, or to a company/institution for acquiring its debentures or bonds also requires quoting of PAN.
8. Besides, payment of Rs 50,000 or more in a year as life insurance premium also requires PAN.
9. Meanwhile, the Supreme Court has said that linking of PAN with Aadhaar is mandatory for filing of income tax returns.
10. Applications for obtaining a PAN can be made in both offline and online modes. In the online mode, the applicant registers his or her request through the website of securities depository NSDL (National Securities Depository Limited) or financial service provider UTIITSL (UTI Infrastructure Technology And Services Limited). (Read: How to apply for a PAN card online)