Benefits Of PAN Card In India: Advantages, Uses And Application Process
A PAN card is a vital document for every individual and company. It is essential for our regular transactions and enables the Income Tax Department to track tax payables. Whether a person converts Indian rupees into a foreign currency, invests in the stock market, or buys a new house─ PAN is mandatory.
Keep reading to explore the advantages of a PAN card!
Uses of a PAN Card
You will need a PAN card in the following cases:
Insurance premiums
According to the guidelines of the IT department, you will require a Permanent Account Number while paying an insurance premium of above Rs. 50,000 per annum.
Phone connections
If you are opting for a new mobile or telephone connection, you will need a PAN card. You cannot avail a connection from the private cellular operators without having it.
Cash deposits
PAN details are mandatory in case you are depositing cash of more than Rs. 50,000 (in one go). A bank has to report any large cash deposit to the RBI in order to prevent money laundering.
Fixed deposits
If an individual invests more than Rs. 50,000 in a fixed deposit, he/she will require PAN. This is applicable since a bank deducts TDS on the interest amount of the fixed deposit.
Loans
While applying for a loan, the lender (whether a bank or a financial institution) will ask for your PAN details. To get approval for your secured loan or unsecured loan, you will need a PAN card.
Property
Renting, selling, or purchasing a property requires a PAN card as ID proof. When buying a property, both the seller and the buyer will require it for the sale deed and the other related sale procedures.
Foreign exchange
When you convert Indian rupees into a foreign currency to travel abroad, you will need a PAN. A money exchange institution/bank/bureau will be checking it.
Identity proof
In India, PAN is widely accepted as an age or identity proof. You can use it while applying for a driving license, voter ID, electricity connection, and passport.
Investments
You can create wealth through investments in securities. If you are investing above Rs. 50,000, you will have to submit PAN details. This applies to debentures, bonds, mutual funds, and equity shares.
Buying jewellery
At the time of purchasing jewellery worth more than Rs. 5 lakh, an individual requires PAN.
Opting for a debit or credit card
It is mandatory to furnish Permanent Account Number while applying for a credit/debit card at a bank. You will not receive such cards without it.
Selling or purchasing a motor vehicle
While selling or buying a motor vehicle of above Rs. 5 lakh, you will require a PAN card.
Income tax filing
All businesses and individuals who have taxable income must file income tax returns. While submitting an IT return, PAN is mandatory.
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Additional Benefits of PAN
Some other benefits of PAN Card are as follows:
Tax deductions
A PAN card is essential for taxation purposes. If an individual or entity has not linked the bank account with Permanent Account Number and the yearly interest income on the savings account exceeds Rs. 10,000, the bank will subtract 30 percent TDS (not 10 percent).
Business registration
While establishing an entity, for example, a firm or a company, you will require a PAN card. It helps a business to obtain a Tax Registration Number (TRN).
Filing for a tax refund
Often, a TDS deduction from an individual’s income exceeds the actual TDS amount that he/she is supposed to give. For claiming the extra tax paid, people need to have their bank accounts linked with PAN.
Demat account
A Permanent Account Number is mandatory for opening a Demat account. Such an account holds stocks in electronic form.
Restaurant and hotel bills
A PAN card is required for restaurant or hotel bills of above Rs. 50,000.
Selling or buying of goods
Furnishing PAN is vital for the sale or purchase of goods or services worth above Rs. 2 lakh.
Banker’s cheque, pay order, and bank draft
A PAN card is essential for transactions exceeding Rs. 50,000 via banker’s cheque/pay order/bank draft.
How does PAN Card benefit the Income Tax Department?
Here are the benefits of PAN Card for the Income Tax Department:
- It helps the tax authority to track the monetary transactions of a company or an individual. An assessment of the tax liability minimises the possibility of tax evasion.
- A Permanent Account Number is unique to a person or an entity. Even if a card gets stolen or lost or the address and name get changed, the number will be constant. Hence, misusing a card is difficult.
- It helps the tax authority to predict the entire tax revenue of the country.
- It is a crucial tool to decide the rate at which companies must be taxed depending on their incomes.
How to Apply for a PAN Card?
One can apply for PAN via online and offline methods.
In case one wishes to apply online for a PAN card, he/she can do it through the NSDL portal and UTIITSL website.
How to Apply for PAN through NSDL portal
Given below are the steps that one can follow for PAN card application through the NSDL portal:
- Step 1: Visit NSDL Official Website to Initiate the Application Process.
Go to the official website of NSDL to apply for a PAN Card.
- Step 2. Choose the Type of Application from the Dropdown Menu.
Select ‘New PAN for Indian citizens’ or ‘foreign citizens’ from the dropdown menu. For PAN card correction, choose ‘Change or correction in details of existing PAN’.
- Step 3. Select the Relevant Category.
Select individual/associations of persons/ body of individuals or any other category that is applicable from the dropdown menu.
- Step 4. Fill out Personal Details
Provide your name, email address, mobile number, date of birth in the form. Tick the check box to acknowledge. Enter the CAPTCHA as given and click on ‘Submit’. The completed form will be displayed on the screen. If you don’t have to edit anything, click to proceed.
- Step 5. Choose the Digital KYC for Verification
Select digital KYC using Aadhaar OTP. Select Aadhaar in all the fields if you are using the same for address proof, identity proof and DOB.
- Step 6. Proceed to the payment section.
Make the required payment via demand draft/net banking/debit card/credit card. After successful payment, you will receive a payment receipt.
- Step 7. Choose the ‘Authenticate’ Option for Authentication of Aadhaar.
Click to proceed with e-KYC. You will receive an OTP on the Aadhar-linked mobile number. Type in the OTP for form submission. Click to proceed with the e-sign option. Provide your Aadhar number. You will receive an OTP on the Aadhaar linked mobile number Enter the OTP for submission of the application form. You will receive an acknowledgement slip.
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How to Apply for PAN through the UTIITSL portal
The steps to apply for PAN through the UTIITSL portal are as follows:
Step 1: Go to the official UTIITSL portal. Navigate to the PAN services section and choose ‘PAN Card for Indian citizen/NRI’.
Step 2: Select ‘Apply for New Card (Form 49A)’
Step 3: Select physical mode or digital mode, i.e. whether you will submit the form physically or digitally.
Step 4: Enter your personal information and all other required details.
Step 5: Verify the information and press the ‘Submit’ button.
Step 6: Make the required payment through a payment gateway. After successful payment, you will receive a confirmation.
Step 7: Attach 2 passport size photographs and your signature on the designated space.
Step 8: Attach the required identity proof, address proof, date of birth proof. Submit the application form online. You can also submit the hard copy at the nearest UTIITSL office for PAN issuance.
Steps to Apply for PAN Offline
The steps to apply for PAN offline are as follows:
Step 1: Download Form 49A from the official NSDL website.
Step 2: Fill up the form. Attach 2 photographs in the required format.
Step 3: The required amount has to be paid via demand draft receivable at Mumbai UTIITSL.
Step 4: Don’t forget to attach photocopies of the required documents along with the application form. Remember that these copies have to be self-attested.
Step 5: Submit the application at the UTIITSL centre or at the NSDL office.
Step 6: After the generation of PAN, you will receive it at your residential address.
Who is Eligible to Have a PAN Card?
Every taxpaying entity needs to have a PAN card for carrying out transactions. Given below are the details of the eligibility criteria for a PAN card:
PAN Card Eligibility for Indian Citizens
The PAN Card eligibility criteria for Indian citizens are as follows:
- Applicant has to be an Indian citizen with valid address proof, date of birth proof and proof of identity.
- A limited liability partnership (LLP) firm needs to submit a copy of the registration certificate as issued by the Registrar of LLPs.
- For a Hindu Undivided Family (HUF), the head of the family will have to apply for the PAN on behalf of the entire family. The affidavit has to be made by the HUF karta.
- A partnership firm has to submit a copy of their registration certificate or copy of the partnership deed.
- Trusts have to submit a trust deed and registration certificate number as issued by the Charity Commissioner.
- A minor will need a PAN card in case the child has been made a nominee or if someone has made investments in his/her name. The child’s parents can sign Form 49A on his/her behalf.
PAN Card Eligibility for Foreign Citizens/Entities
A foreign citizen or entity would need a PAN card if they wish to carry out any financial transaction in India. They need to fill up Form 49AA.
Also, they need to provide the following documents:
Identity proof
A foreign citizen or entity needs to submit the following documents:
- Passport/PIO card/OCI card
- Taxpayer Identification Number (TIN) or Citizenship Identification Number (CIN)
Address proof
Given below are the documents that people need to submit:
- Passport/PIO card/OCI card
- CIN (Citizenship Identification Number) or TIN (Taxpayer Identification Number)
- Bank account statement of the NRE (Non Resident External) account held in India
- A residence permit issued by the police or a certificate which shows the residence status in India or Registration certificate with Indian residential address provided by the foreigner’s registration office
- Letter of appointment or contract provided by an Indian company or the copy of visa
- Bank account statement of the country in which the person resides
Importance of Linking Aadhaar with PAN
Given below are the reasons why you should link your Aadhaar with PAN:
- Officials will deactivate all the PAN cards that are not linked with Aadhar after March 31 2023.
- Income tax return form will not be processed if PAN is not linked with Aadhaar.
- Linking PAN with Aadhaar is important as it will address the problem of multiple PAN cards issued in the same name.
- Cardholders will receive minute details of all taxes levied for future reference.
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Final Word
The above-specified advantages and uses of a PAN card explain its necessity and applicability in our day-to-day financial transactions. An individual or entity cannot possess multiple PAN cards to avoid tax implications.
FAQs on PAN Card Benefits
Ans: Yes, even a minor can apply for a PAN card as per the provisions of Section 160 of Income Tax Act. Children below the age of 18 years will receive a minor PAN card. The minor’s parents’ address and identity proof will be required along with other required details.
Ans: PAN card is a mandatory document for everyone who has to pay taxes in the country. If a business or profession earns income exceeding Rs. 5 lakh in a particular year, the entity must have a PAN. Additionally, the Income Tax Department has made PAN mandatory for certain transactions.
Ans: PAN cards are issued to any taxpayer in the country. Let’s take a look at the different categories that can opt for this document:
– Societies
– Trusts
– Partnerships/Firms
– Company
– Hindu Undivided Family (HUF)
– Individuals
– Non-resident Indians
Ans: You can register for a PAN card in the following way:
Go to the official portal of UTIITSL or NSDL
Furnish the required information in the form
Provide the required documents
Give the processing charge
Ans: You can receive a duplicate PAN card in the following way:
Log in to the official portal of UTIITSL or NSDL
Fill up Form 49-AA if you are a foreigner and Form 49-A in case you are an Indian citizen
Pay the necessary fee
You will get your card in around 45 days.
Ans: As per the Union Budget, 2017, it is mandatory to link PAN with the Aadhaar number. A person needs to quote his/her Aadhaar number while availing of a new PAN. It will help the tax authority to minimise the issue of multiple PAN cards against a single name.
Ans: You must fill up the application PAN Change Request form by specifying the Permanent Account Number you are presently using on the top. You should mention the other PAN (inadvertently issued) under the form’s item no. 11. Next, you need to submit the form along with the copy of the PAN card you want to cancel.
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
