What are the Uses of PAN Card: Benefits Explained

In addition to being utilised by the Income Tax Department to track taxpayers, the PAN card is mandatorily required for several daily transactions. Therefore it is of utmost importance to be aware of the PAN card uses.

And for that, you are at the right place!

Scroll through to know what are the uses of PAN card!

What are the Uses and Benefits of Having a PAN Card?

There are a number of advantages of a PAN card. Illustrated below are all the key PAN card uses:

Helps to Start a Business

Planning to launch a start-up?

There are several PAN card uses when it comes to starting a business. As per norms laid down by the Government of India, the PAN is mandatory for every business in the country.

Moreover, companies also need to have a Tax Registration Number or TRN in order to trade and file tax returns. And, having a PAN is the only way to obtain this TRN. In addition, several e-commerce web portals mandate companies to have a TRN if they wish to sell products on their platform.

Deduction in Taxation

One of the primary reasons to have a PAN card is for the purpose of taxation. If an individual with annual interest earnings exceeding ₹10,000 on savings deposits has not linked his or her PAN with the bank account, the concerned bank will deduct TDS at a rate of 30% instead of 10%.

Opening a Demat Account or Bank Account

According to the current norms, an individual will not be able to open a bank account if he/she does not possess a PAN card.

However, there is only one exception to this stated rule, and that is when one opts to open a zero balance account as per Prime Minister Jan Dhan Yojana. In this case, one can use a Ration card or a Voter ID card as identity proof. Similarly, a PAN card is necessary when an individual opens a Demat account.

Income Tax Returns Filing

As you may know, every individual eligible for income tax must file their income tax returns. And for doing so, a PAN card is necessary.

Investing and Purchasing RBI Bonds or Insurance

Before investing, an individual will first have to fill a form available on the website of the Association of Mutual Fund of India (AMFI). In addition, he/she must attach an address proof and a self-attested copy of the PAN card.

It is only when an individual is KYC compliant and possesses a PAN card, that his/her KYC document gets accepted while investing. Similarly, a PAN card is mandatory to make an investment amounting to ₹50,000 or more in RBI bonds.

Buying Foreign Currency

As per the Foreign Exchange Management Act, a PAN card is necessary for purchasing foreign currency amounting to ₹50,000 or higher. The main reason behind this is that every transaction involving foreign currency is categorised under current or capital account transactions.

Transaction of Listed or Unlisted Securities

As per the Securities Contracts (Regulation) Act 1956, a PAN card is necessary for buying unlisted or listed securities, except for bonds, debentures, shares, and other marketable securities. This norm is applicable if the amount for every transaction is more than ₹1 lakh. A PAN card is also mandatory for purchasing or selling an unlisted company’s shares valued at greater than ₹1 lakh.

Purchasing or Selling Immovable Property

An individual needs to provide PAN details while selling or purchasing immovable property, such as a house, the worth of which is higher than ₹10 lakhs.

Purchasing or Selling a Four Wheeler Vehicle

A PAN card is also mandatory if an individual sells or purchases a four-wheeler vehicle. Even in cases where an individual wants to acquire a loan for buying a car, having a PAN card is a must.

Cash Deposits, Pay Orders, Banker’s Cheque, Bank Drafts

The PAN card needs to be shown if one intends to opt for pay orders, banker’s cheque, bank drafts, and cash deposits of more than a limit of ₹50,000. Furthermore, this also holds true in cases wherein an individual is willing to make a deposit of more than ₹50,000 through cash into his /her bank account.

How Does the Government Benefit from a PAN Card?

Alongside its benefits for the citizens of India, there are several PAN card uses for the Income Tax Department of the country. These advantages are listed below:

Through a PAN card, the Income Tax Department of India can keep track of every financial transaction. These transactions hold significance in determining the tax liability of an organisation or an individual. Additionally, this reduces the possibility of tax evasion, which is one of the key PAN card uses.
A PAN card is used for determining the total generated tax revenue in the country.
This card also helps to fix the taxation rate for an entity depending on the earnings.

By now, you must be aware of the many benefits of a PAN card. We hope that this guide on PAN card uses assists you to utilise this card properly.

Frequently Asked Questions

✓ Who can apply for a PAN card?

All Indian citizens having a source of income are eligible to apply for a PAN card. Moreover, obtaining a PAN card is mandatory for every taxpayer in India or an individual who intends to file an IT return on behalf of others or themself.

✓ Can an individual possess more than one PAN?

No. It is illegal to possess or obtain more than one PAN. Additionally, doing so can attract a penalty of up to ₹10,000.

✓ What to do if an individual has more than 1 PAN?

The individual can fill up and submit a PAN Change Request application form. On the top of this form, he or she must mention the PAN presently in use. Moreover, all other inadvertently allotted PAN(s) must be mentioned at item number 11 in this form. Along with this form, you must submit the corresponding copy or copies of your PAN card to cancel them.