PAN Card is a card with a unique alphanumeric number issued in India which confirms the tax filing status of holders; not necessarily of tax-paying, since not all holders have income levels above the minimum threshold which renders them liable to pay taxes.
Besides serving as a major, mainstream Proof of Identification (or ID Proof, as it is referred to in common parlance), a PAN Card holds immense significance, offering an array of invaluable benefits.
In this article, we will touch upon these benefits in reasonable detail, especially ones you may not have realised easily till now.
As we mentioned above, a PAN Card is a major proof of identity in India. In many places, you can show your PAN Card to prove your identity. Instances include checking into hotels, boarding trains and planes, applying for a new phone/gas/electricity, etc. connection, and so on.
As a matter of fact, the list of places where a PAN Card serves as proof of identity is practically endless. At the same time, as a precautionary measure, we always advise our readers to double-check the places where a PAN Card will suffice as proof of identity, especially since it is NOT a universally accepted ID proof in India.
Further, at this juncture, it would be appropriate to point out the difference between ID Proof and Residence Proof; your PAN Card does not specify your residential address and therefore, it is NOT a Proof of Residence but ONLY of ID.
Cash Deposits and Payments
Given a large number of cash dealings in India, with tax evasion/avoidance a possible motive, the government of India has taken a series of measures to monitor such cash transactions.
For instance, if you aspire to deposit an amount in excess of Rs. 50,000/- in your bank account, furnishing your PAN number is essential. Likewise, any sale or purchase of an immovable property which is valued at Rs. 5 Lakhs or above requires PAN details.
There are many such instances. Suffice it to say that any major cash dealing with a mainstream entity like a bank is quite difficult in India, in the absence of a PAN card.
As with cash dealings, most investments also require PAN details to be furnished. Examples include purchasing bonds, making investments in mutual funds, buying insurance policies, sale, and purchase of shares, and more.
Again, as with the cash dealings example we cited in the previous point, in the case of investments too, it is practically impossible to go through with desired transactions, in the absence of a PAN number.
Filing Tax Returns
Filing tax returns is one of the primary benefits that PAN cards offer. Without quoting your PAN number, it is not possible to file tax returns, not only for individuals but also for corporations, small businesses such as partnership firms, and so on.
This brings us to a major facet of PAN Cards – they are not only issued to individuals but to any tax filing entity such as a company, firm, or even a HUF (Hindu Undivided Family).
Being the primary value-add of PAN cards – one which you are likely to be well aware of already, we are not getting into too much detail regarding tax filing.
Opening a Bank Account
In nearly all cases, you will need a PAN card to open a bank account in India. Yes, there are exceptions, for instance, student accounts which may not mandate a PAN card but in most cases, quoting your PAN number is an essential aspect of the process of opening a bank account in India.
Yes, broadly, this does indeed come under the purview of an ID proof but with opening bank accounts, there is more to PAN Cards than merely ID proof. Essentially, it also confirms your tax filing stature.
At the time of filing tax returns, it especially comes handy since banks can confirm TDS or Tax Deducted at Source based on net credits to your account, minus taxes that were deducted.
Clearly, when it comes to PAN Cards, there is so much on offer. Without a PAN Card in India, you will surely be missing out on a wide variety of benefits.