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What is PAN CARD?
o A permanent account number (PAN) is a ten-character alphanumeric identifier issued by the Indian Income Tax Department in the form of a laminated “PAN card.”
o Department, to any “person” who applies for it or to whom the department assigns it without an application. It is also available in the form of a PDF file.
o A PAN is a one-of-a-kind identification number issued to all judicial entities identified under the Indian Income Tax Act of 1961. The income tax PAN and its associated card are issued in accordance with Section 139A of the Income Tax Act. It is issued by the Indian Income Tax Department, which is overseen by the Central Board for Direct Taxes (CBDT), and it also serves as an important form of identification.
o It is also issued to foreign nationals (such as investors) on the condition that they have a valid visa, so a PAN card is not acceptable as proof of Indian citizenship. A PAN is required to file income tax returns.
Structure Of PAN Card
The PAN (or PAN number) is a unique ten-character alpha-numeric identifier.
The following is the PAN structure: [P — Individual or Person] is the fourth character. AAAPZ1234C is an example.
The first five characters are letters (by default uppercase), followed by four numerals, and the final (tenth) character is a letter.
The first three characters of the code are three letters that form an alphabetical sequence from AAA to ZZZ.
The fourth character identifies the type of card holder. Each holder type is distinguished by a letter from the following alphabet:
The letter
A — AOP (Association of persons)
B — BOI (Body of individuals)
C — Company
F — Firm
G — Government
H — HUF (Hindu Undivided Family)
L — Local authority
J — Artificial juridical person
P — Person (Individual)
T — Trust (AOP)
The PAN’s fifth character is the first character of either:
a person’s first, surname, or last name, in the case of a “personal” PAN card, where the fourth character is “P” or
In the case of a company/HUF/Firm/AOP/trust/BOI/local authority/artificial judicial person/government, the fourth character is “C”, “H”, “F”, “A”, “T”, “B”, “L”, “J”, “G”.
The final (tenth) character is an alphabetic digit used as a check-sum to validate the current code.
Uses Of PAN Card:
The Uses of PAN Card are given below:
IT Returns Filing:
Individuals and entities who are subject to income tax are required to file IT returns. A PAN card is required for filing IT returns, which is why individuals and other entities apply for one.
Opening a bank account:
To open a new bank account, whether savings or current, a PAN card is required. To open an account with any bank, whether public, private, or cooperative, a PAN card must be presented.
Buying or selling a motor vehicle:
If you want to buy or sell a car worth more than Rs. 5,00,000, you must provide your PAN Card details during the transaction.
Applying for a credit or debit card:
Regulations require you to provide your PAN card details when applying for a debit card or a credit card at any bank or financial institution. If this criterion is not met, the bank will not issue the card.
Purchase of jewellery:
If you want to buy any type of jewelry worth more than Rs. 5,00,000, you must provide your PAN card details at the time of purchase.
Making investments:
Investing in securities is thought to be a good way to build wealth. If you intend to invest in securities, you must provide your PAN details for any transactions exceeding Rs. 50, 000. This includes stocks, mutual funds, bonds, and debentures.
Proof of Identity:
A PAN card is accepted as valid proof of identity and proof of age throughout the country. It can also be used as identification proof when applying for a passport, voter ID, driver’s licence, or an electricity connection, among other things.
Foreign Exchange:
If you are travelling abroad and want to convert your Indian currency into foreign currency, you must provide your PAN number at the money exchange bureau/bank/institution where you are converting the money.
Property:
PAN card proof is now required when buying, selling, or renting property in India. When purchasing property, the PAN details of both the buyer and the seller must be listed on the sales deed and any other such documentation for the sale to be complete.
Loans:
If you need to get a loan, all loan providers, both banks and other lending institutions, require you to provide your PAN number when you apply for the loan. PAN information is required for all loans, from education loans to personal loans, in order for the loan to be approved.
Fixed Deposits:
If you intend to invest in a Fixed Deposit (FD) of more than Rs. 50, 000 in a bank, you must provide your PAN details. The bank will deduct TDS (Tax Deductible at Source) from the FD interest amount.
Cash Deposits:
If you make a cash deposit of more than Rs. 50,000 at a time, you must also provide your PAN details. This conforms to the RBI mandate, which requires banks to report any large cash deposits to the RBI in order to prevent money laundering.
Telephone Connections:
If you want to get a new phone or mobile phone connection, you must provide your PAN number, as private cellular operators will not connect you without it.
Insurance Payments:
PAN card details are required by the Income Tax Department when making an insurance payment in excess of Rs. 50, 000 per year.
Importance OF PAN Card:
If you want to buy a car or a house, invest in the stock market, or convert your Indian rupees to foreign currency, there is one thing you will need for each of these activities. You might wonder what could possibly connect these. The PAN card is the answer. The Income-tax Department’s Permanent Account Number (PAN) card is one of the most important documents nowadays.
The card was created to prevent tax evasion by individuals and entities by connecting all financial transactions made by a specific individual or entity. As a result, the Income Tax Department has a detailed record of all major tax transactions.
Indian citizens, NRIs (Non-Resident Indians), OCI (Overseas Citizen of India) cardholders, PIOs (Persons of Indian Origin), and foreigners who fall under the purview of the Income Tax Act of 1961 are all eligible to apply for a PAN card.
Firms and corporations, as well as governments and minors, can apply for a PAN card.
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