The most common word which affects the life professional, corporate and other people is PAN, in this advance era still, people have question or myth that we don’t get a salary from anywhere so we don’t require PAN Card. In this write-up, we will have an insight under the concept of PAN Card.
The primary objective of PAN is to use a universal identification key to track financial transactions that might have a taxable component to prevent tax evasion. The PAN number remains unaffected by the change of address throughout India.
PAN, or permanent account number, is a unique 10-digit alphanumeric identity allotted to each taxpayer by the Income Tax Department under the supervision of the Central Board of Direct Taxes. It also serves as an identity proof. PAN Card is mandatory for financial transactions such as receiving taxable salary or professional fees, sale or purchase of assets above specified limits, buy mutual funds and more.
WHO MUST APPLY FOR PAN?
Anybody who earns a taxable income in India, including foreign nationals who pay taxes here.
Anybody who runs a business (be it retail, services or consultancy) that had total sales, turnover or gross receipt exceeding a specified limit in the previous financial year. (From December 5, 2018. The new rule has made it mandatory for all businesses with a net turnover/ gross income of up to Rs 2.5 lakh per year to have a PAN)
HOW TO APPLY?
Use 'Form 49A' or 'Form 49AA' as applicable to you. Find more details at incometaxindia.gov.in.
You can find the location of PAN card offices in any city from the websites of the Income Tax Department or National Securities Depository Limited (NSDL)or UTI Infrastructure Technology (UTIITL).
You will need copies of proof of Identity and address.
You can also apply online through websites of the I-T Department (Income Tax) or National Securities Depository Limited NSDL or UTI Infrastructure Technology (UTIITL).
WHICH FORM TO USE?
Individual Citizens of India.
Individual who are not Indian Citizens
HUF-Hindu Undivided families.
Companies Registered in India.
Companies Registered outside India.
Associations Registered in India.
Firms Formed or Registered outside India.
Firms’, Including LLP’s Formed or Registered in India.
LLP’s Formed or Registered outside India.
WHY GET A PAN NUMBER OR PAN CARD?
Obtaining PAN is may be optional or voluntary like passport, driving license, Aadhaar etc. However, its use is mandatory at required places, like PAN for high-value financial transactions, Driving License for motor driving, passport for foreign travel and more:
For payment of direct taxes
To file income tax returns
To avoid deduction of tax at a higher rate than due
To enter into a specific transaction such as:
(a) Sale or purchase of immovable property value exceeding a specified limit (b) Sale or purchase of a vehicle other than a two-wheeler.
Any mutual fund purchase.
STRUCTURE OF YOUR PAN - PERMANENT ACCOUNT NUMBER
For illustration -A typical PAN is AFZPK7190M. The combination in which alphabet and numbers are arranged is explained further:
First three characters i.e. "AFZ" in the above PAN are alphabetic series running from AAA to ZZZ.
The fourth character of PAN i.e. "P" in the above PAN represents the status of the PAN holder. "P" stands for Individual, "F" stands for Firm, "C" stands for Company, "H" stands for HUF, "A" stands for AOP, "T" stands for TRUST etc.
The fifth character i.e. "K" in the above PAN represents the first character of the PAN holder's last name/surname.
Next four characters i.e. "7190" in the above PAN are sequential number running from 0001 to 9999.
Last character i.e. "M" in the above PAN is an alphabetic check digit.
A pan card is required for a lot of purposes thus making it an extremely valuable and indispensable part of most people lives. The likeliness of PAN identity theft has grown with the growing importance of PAN. Merely safeguarding the physical copy cannot prevent misuse. Information can be misused very easily for benami property transactions or purchase of tickets of high value, as a majority of transactions demand simply quoting of the PAN or a photocopy of the PAN Card. Thus, a copy of your PAN card or its number could be quoted in transactions that you are not even a part.
The entire contents of this article are solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation by the Author. Compliance Calendar LLP and the Author of this Article do not constitute any sort of professional advice or a formal recommendation. The author has undertaken utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify and confirm the updates from the genuine sources before acting on any of the information’s provided hereinabove. Compliance Calendar LLP shall not be responsible for any loss or damage in any circumstances whatsoever.