PAN Card and Income Tax

PAN Cards are not only mandatory for all income-earning individuals, but also provide a number of benefits as follow:

1. To sell or purchase immovable properties within the country.
2. To purchase automobiles.
3. To purchase banker's draft, checks and pay orders.
4. To purchase debentures or shares that exceed ₹1 lac in value.

1. To make deposits in excess of ₹50,000.
2. To open a demat account, avail a credit card, and starting a bank account.
3. A PAN Card can also be used as a valid photo ID proof.
4. To enter into various financial transactions.
5. To obtain cell phone and landline connection.
6. PAN Cards are especially useful for NRIs as they make it relatively simple to purchase property or engage in business within the country.
7. To open minor accounts.

Importance and Benefits of PAN Card for Income Tax Authorities

PAN Cards enable the authorities to estimate the overall tax generated in India. As such, it also aids in determining the rate of tax to be applied to various income classes. The Income Tax Department of India relies on PAN to track the financial transactions of all individuals, and based on the information, they calculate the rate at which you must be taxed. Following are the benefits afforded by PAN Cards to the Income Tax Department of India

1. It is used as a proof of identity as it includes the holder's name, address and photograph.
2. It enables the department to determine the tax slab applicable to each individual. Individuals without PAN Cards will be subject to 20% tax regardless of which bracket they fall under.
3. It makes it easier for authorities to track the income earned by individuals and apply the associated taxes in accordance.
4. Since PAN numbers are unique to each PAN Card holder, there will be no concerns of misuse even if you lose the card, or if you have a change in name or address.

Read More About  - Uses of PAN Card

New PAN Rules Related to Income Tax

Under the leadership of Prime Minister Narendra Modi, the Indian government has made amendments to PAN rules . Following are the key rules in the new mandate:

1. All individuals who wish to make transactions like foreign travel or hotel bills in excess of ₹50,000 will have to furnish their PAN Card.
2. PAN Cards will be used for all transactions, even for the purchase of jewellery in excess of ₹2 lacs, whether it is paid in cash or by card.
3. PAN Cards are compulsory for buying immovable property valued in excess of ₹10 lacs. This is one of the few amendments that has been welcomed positively by the public as the previous limit for the purchase of immovable property was ₹5 lacs, now making things easier for small home buyers.
4. PAN should be mandatorily quoted for term deposits more than ₹50,000 in one shot, or ₹5 lacs in case they are made over a year with NBFCs, post offices and banks.
5. PAN will be compulsory for all payments exceeding ₹50,000 for prepaid instruments or cash cards in addition to acquiring shares of unlisted companies in excess of ₹1 lac.
6. PAN Cards are compulsory for opening every kind of bank account except Pradhan Mantri Jan Dhan Yojana accounts.
7. PAN Cards are mandatory for making cash deposits in excess of ₹50,000, or to buy bankers cheque / pay orders / bank draft worth ₹50,000 or more, and payment of LIC premiums exceeding ₹50,000 per year.

Individuals who do not possess a PAN Card but wish to carry out transactions that mandatorily require a PAN will be required to fill up and submit Form 60. This form requires an individual to provide personal information such as name, date of birth, address and mobile number in addition to information regarding the mode of transaction, such as cash, card, online transfer, cheque, banker's cheque, draft, etc.

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