Uses Of Pan Card – All You Need To Know About The Benefits Of Pan Card

Uses Of Pan Card – All You Need To Know About The Benefits Of Pan Card

PAN card is a unique identification issued to every taxpayer in India. It acts as one of the most crucial documents for any financial transactions, including purchase or trade or movable or immovable asset, investments, or conversion of Rupee into foreign currency.

One of the primary purposes of PAN card is to prevent tax avoidance; as it links all financial transactions of a business entity or an individual under one account number, PAN allows Income Tax Department of India to track and maintain a detailed record of all major transactions that are likely to fall under the tax bracket.

 – There are approximately 170 million PAN cards in India (as of a census conducted in 2014).

PAN is issued to India’s citizens, non-resident Indians, persons of Indian origin, overseas citizens of India, as well as to any foreigner who may fall under the jurisdiction of the Income Tax Act of 1961. A single PAN is issued to an entity only once, and no changes in the permanent account number are authorised under any circumstances.

Use of PAN card

PAN is used for several purposes; let’s take a look at some of them.

To file Income Tax returns

Individuals who are liable to pay Income Tax will require their permanent account number to file the return. It acts as a compulsory document without which the Income Tax return will be considered invalid.

To open a bank account

Another reason why PAN card is important is its significance as a document. However, under special circumstances (such as under Pradhan Mantri Jan Dhan Yojana) one can use other IDs like Aadhaar or Voter ID card to open a bank account.

PAN card is also necessary to apply for financial products like loans, credit or debit cards, etc. It helps the Income Tax Department of India track an individual’s expenses, income, and other essential aspects.

As a proof of identity

PAN card is also used as a valid photo identity proof by financial institutions and other organisations.

To purchase a movable or immovable property

Purchasing or selling of any asset costing over Rs.5,00,000 requires sharing the PAN details with the concerned authorities. This regulation applies for assets like vehicles, jewellery, as well as properties. PAN details need to be mentioned in the sales or purchase deed of a property while making a transaction, without which it will be deemed illegal.

To exchange foreign currency

Another important use of PAN card involves foreign currency exchange. An individual is required to share the details of their PAN at a currency exchange institution.

To make an investment

Any investment over Rs. 50,000 will require furnishing one’s PAN details while signing up for the venture. This clause applies for equities, debentures, bonds, mutual funds, fixed deposits, etc. The Income Tax Department uses this information to calculate Tax Deducted at Source against the investment income of an individual. Similar clauses also apply for insurance premiums if the total sum exceeds Rs.50,000 in a year.

Another importance of PAN card is that it is used as an essential document if an individual wishes to make a cash deposit of more than Rs.50,000 at a time. It is in accordance with the latest guidelines issued by the Reserve Bank of India; any large cash deposits have to be reported to prevent chances of money laundering.

Benefits of PAN card

 – PAN is used to claim Income Tax refund

An income tax refund is directly transacted to a taxpayer’s account if it is linked with his or her PAN details.

 – PAN reduces chances of misuse

PAN card contains a colour photograph of the account holder, which reduces the chances of fraudulent use. An individual (or organisation’s) permanent account number also remains same throughout its lifetime, which creates a more robust system.

To stay financially protected against such frauds, one can easily purchase an identity theft insurance cover. This insurance policy provides financial coverage of legal expenses, loss of wage, or other financial losses which may have happened due to unauthorised use.

Use of PAN card surpasses as an identity proof, acting as one of the most important documents required for large scale transactions as well as tax payments. It is one of the primary reasons why one should consider availing insurance plans like Wallet Care. This insurance plan reimburses the insured individual against the cost of PAN card replacement and liaises in the replacement procedure as well. Women can also avail a purse care insurance cover that provides similar coverage, ensuring hassle-free replacement and zero financial liability in case of an unforeseen incident.

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