PAN stands for Permanent Account Number issued by Income Tax Department under Income Tax Act, 1961. It is a unique alphanumeric, 10-digit number imprinted on a laminated plastic card. Individuals, Firm, Company, Association of persons, Body of Individual, Hindu Undivided Family, co-operative society, Government Agencies, Artificial Juridical Person, Local Authority, Limited Liability Partnership, Trust and all those whose income are taxable under the Income Tax Act, 1961 are required to acquire a PAN Card. Below we have expalained about PAN card advantages.
Benefits and Uses of PAN Card
1. For purchase or sale of vehicles except two-wheelers.
2. For opening any account with a banking company except for time deposit wherein PAN card details is required for a time deposit of amount exceeding Rs 50,000 or totaling more than Rs 5,00,000 during any financial year with –
- Any bank or any co-operative bank
- Post Office
- Nidhi Companies Act 2013 which is stated in section 406
- Non-banking financial company
3. For the application, related to the issuance of a credit card.
4. For demat account opening which is done with any depository, or with a custodian of securities or any person with Securities Exchange Board of India (SEBI).
5. For payment in cash which is more than Rs 50,000:
- To any hotel or any restaurant against a single bill generated at one incidence
- For travelling to a foreign destination or payments for buying foreign currency at any one incident
- While making bank drafts or pay orders or banker's cheques from a bank or any type of co-operative bank.
6. For paying an amount of money more than Rs 50,000:
- To any mutual fund company for buying its units
- to any corporate organization or to an public institution for buying its debentures or bonds issued by the company or institution
- To the Central Bank of India, RBI, for buying bonds issued by them
7. For cash deposits which are more than Rs 50,000 within one day with banks including any co-operative bank.
8. For payment in cash or by way of a bank draft or by pay orders or a banker's cheque for an amount totaling more than Rs 50,000 in any financial year for one or more pre-paid payment instruments. It is as defined in the policy guidelines of issuance and operation of pre-paid payment instruments issued by the Reserve Bank of India, Under Section 18 of the Payment and Settlement Systems Act, 2007 to any bank which also includes a co-operative bank or to any other company or institution.
9. For the payments of a life insurance as a premium to the insurer for an amount totaling more than Rs 50,000 in any financial year.
10. For buying or selling securities (except shares) for any amount which is more than Rs 100,000 per transaction.
11. For buying and selling of a company’s shares where the company is not listed in a recognised stock exchange for any amount more than Rs 1,00,000 per transaction.
12. For buying and selling of any property which is immovable for any amount more than Rs 10,00,000 or if it is valued by a stamp valuation authority to an amount which is more than Rs 10,00,000.
13. For buying and selling of goods or services of any nature other than immovable property for an amount exceeding Rs 2 per transaction.
14. A minor person can use PAN of his/her father or mother or guardian provided he/she does not have any income chargeable to pay as Income-Tax.
15. A declaration in Form No60 can be made, if a person who does not have a PAN Card, enters into any of the transactions mentioned above.
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The Structure of the 10-digit PAN
- The first five and the 10th character are alphabetic while the rest four are numeric in nature.
- The first three out of the first five alphabetic characters range between AAA to ZZZ.
- 5th to 9th characters range between 0001 and 9999. The last character is alphabetic check digit.
- The fourth character indicates the status of the PAN Card holder, for example:
- “P” stands for Individual
- “T” stands for Trust
- “C” stands for Company
- “G” stands for Government Agency
- “H” stands for Hindu Undivided Family
- “A” stands for Association of person
- “B” stands for Body of Individuals
- “J” stands for Artificial Juridical Person
- “L” stands for Local Authority
- “E” stands for Limited Liability Partnership
- “F” stands for Partnership Firm, and so on.
- The fifth character represents PAN holder’s last name or surname in case of individual and for non-individuals’ first character of PAN holder’s Name.
PAN Card application form can be submitted online to two representative agencies namely UTI Infrastructure Technology and Services Limited (UTIITSL) and National Securities Depository Limited (NSDL). These agencies have been authorized by Income Tax Department to process PAN Application but the allotment of the PAN number remains in the hands of the Income Tax Department. PAN application is to be submitted in Form 49A for Indian residents and Form 49AA by non-residents including foreign companies.
It is mandatory to obtain a PAN Card
- Individuals whose total income or the total income of any other person in respect of which the earlier mentioned person is assessable during the year, exceeds the threshold amount which is not chargeable to tax.
- When returns are to be furnished by Charitable Trusts.
- Individuals carrying on any business or profession whose total sales, turnover, or gross receipts are or is likely to exceed Rs 5,00,000 in any financial year.
- For obtaining Import Export code by Importer/Exporter.
- Individuals who are entitled to receive any sum or income after deduction of tax at source.
- Individuals who are liable to pay excise duty or a producer or manufacturer of excisable goods or a registered person of a private warehouse in which excisable goods are stored and an authorized agent of such individuals who issue invoices.
- Individual and his agent who provides services and thus is liable to pay the service tax.
- Individuals registered under the Central Sales Tax Act or the General Sales Tax law of the relevant state or union territory.
- Individuals who intend to do specified financial transactions where PAN is compulsorily required.