PAN or the permanent account number issued by the IT Department is a vital document nowadays. It is a 10-digit code issued to Indian citizens. Its purpose was to keep track of a person’s income details and transactions. However, there are copious other benefits from having a PAN-Card. Some of them are as follows.
Benefits of PAN Card
Any individual or entity must specify his/her PAN while filing for the income tax returns. This is the primary purpose of a PAN card.
One crucial reason why PAN Card is necessary is for taxation. Enclosing the PAN can help minimize the TDS (tax deduction at source) rate. For example, if a person or an entity with annual savings interests more than 10,000 doesn’t link the PAN number with the bank account, the bank’s TDS deduction would be 30% instead of 10%.
Opening a Bank Account
Be it a savings account or a current one, a PAN card is one of the essential documents required to open a new bank account. Every bank, either private or public requires your PAN card if you wish to open an account with them.
Proof of Identity
Along with voter card, Aadhaar card, and other similar Pan Card documents, PAN Card is also valid identity proof. All organizations and financial institutions accept PAN as proof of identity for address, date of birth, signature proof, etc.
Income Tax Refund Claims
Usually, the TDS deducted from a taxpayer is mostly more than the actual payable tax. The taxpayer has to link his PAN card to his bank account so that he/she can claim the extra deduction.
Opening a Demat Account
A Demat account is necessary for a person if he/she wishes to own financial securities like shares, ETF, or bonds. A PAN card is mandatory for opening a Demat account.
Payments and Cash Transactions
Payment for any hotel or restaurant bill above Rs. 50,000 requires a PAN card. Moreover, cash payments crossing Rs. 50,000 a year also need PAN to be furnished.
Purchasing Goods and Services
If the sale or purchase of any kind of goods or services crosses Rs. 2 Lakhs per transaction, you will need to give your PAN details during payment.
If you have purchased gold jewellery worth more than Rs. 5 Lakhs, you need to furnish your PAN Card before paying for the items. You can make such purchases only with a PAN.
Foreign Currency Exchange
If you are travelling out of India, you will have to exchange the Indian currency into the currency required. Banks, exchange bureaus, or institutions where you are converting the money require the details of your PAN.
Be it land, home, or any property, PAN details are necessary to make the purchase or sale. The PAN card details of both buyer and seller must be mentioned in the sale deeds and all the documents relevant to the purchase.
Selling or Buying a Motor Vehicle
Any motor vehicle above Rs. 5 Lakhs requires the buyer’s PAN details before making the payment. Without one, you cannot own such vehicles.
Be it educational, personal, or any kind of loan, the applicant’s PAN details are necessary for approval. Banks and all other lending institutions require you to disclose PAN details in the loan application form.
Fixed and Cash Deposits
For any FD crossing Rs. 50,000, the banks will deduct TDS on the fixed deposit’s interest. One will need a PAN card to reduce these deductions. Moreover, any cash deposit exceeding 50,000 requires PAN details. This is a mandatory measure from RBI (Reserve Bank of India).
If your insurance exceeds Rs. 50,000 a year, you will have to submit your PAN details while making such payments. The Income Tax department of India made this a mandatory requirement for all insurance policies.
The information mentioned above boasts the significance of a PAN card both financially and non-financially. So, if you do not have one, apply for a PAN Card soon.