With the ‘TRAI’, and ‘Aadhaar Challenge’ trending ahead of the ‘KikiChallenge’, it just goes to show how much unsecure systems might be. As hackers try to find means to gain private information via the TRAI Chairman’s Aadhaar Card, we discussed the security aspect of Aadhaar in yesterday’s Loan Singh finance blog post. We also looked at the Aadhaar’s usage while applying for an online personal loan.
Today, we look at Aadhaar’s close cousin – the PAN Card. PAN stands for ‘Permanent Account Number’. It is a unique 10-digit alphanumeric identity that is allotted to every taxpayer by the Income Tax Department. It falls under the supervision of the Central Board of Direct Taxes.
Meaning of PAN
PAN is mandatory for financial transactions such as sale or purchase of assets, buying mutual funds and receiving taxable salary or professional fees. The main objective of PAN is to act as a universal indentation key that tracks financial transactions.
The PAN number remains unchanged irrespective of the change in address across India. Even if you are investing in the stock market, converting rupees into foreign currency or looking to buy a property, PAN is mandatory for these.
Anybody who earns a taxable income in India, including foreign nations who are paying taxes in India, must own a PAN. Anyone who runs a business, may it be consultancy, services or retail, must own a PAN.
New PAN Application
In order to apply for a new PAN card, one has to fill ‘Form 49A’. You can learn more by going to the Income Tax India website.
The locations for the PAN card centres are mentioned on the Income Tax website. You will need copies of your address and identity proof. The approx. cost for application of a new PAN application is `105. For the PAN to be sent to outside India, the cost comes to approx. `971.
You can also apply directly on either NSDL or IT department’s website. While applying online, you will need to pay via netbanking, credit card or debit card. You can track the status of the application online as well.
Advantages of PAN
PAN card is used by resident Indian citizens as well as NRI (non-resident Indians), OCI (Overseas Citizen of India) cardholders, PIO’s (Person of Indian origin), as well as foreigners coming under the purview of the Income Tax Act of 1961.
The card was issued in order to prevent tax evasion by individuals and entities as it links all the financial information made by a particular entity or individual. This helps the Income Tax department to keep a detailed record of all major transactions for tax purposes. Firms, companies and minors can apply for a PAN card. Some more advantages of PAN card are:
Filing IT Returns with PAN
Valid for all individuals and entities who are eligible for income tax and are expected to file their IT returns. The PAN card is mandatory when filing IT returns. This is a primary reason to apply for a new PAN card.
Opening Bank Account with PAN
PAN is a must when opening a new bank account – savings or current. All banks, whether private, public or co-operative must allow the opening of an account based on the PAN card.
Purchasing A New Vehicle with PAN
If you wish to purchase a brand-new motor vehicle, worth more than Rs. 5,00,000, then you need to provide your PAN Card details while conducting the transaction.
New Credit Card or Debit Card
You need your PAN card when applying for either a debit or a credit card. Every bank or financial institution accepts PAN as a criterion. Non-submission of PAN will result in non-application.
Purchase of Jewelry with PAN
When looking to buy brand new jewelry (valued above Rs. 5,00,000), you will need to provide your PAN details at the time of purchase.
Investments with PAN
Investing in securities seems like a good way to plan for the future. Doing so needs you to provide your PAN, for transactions above Rs. 50,000. This includes debentures, bonds, equities and mutual funds.
Foreign Exchange with PAN
In case you are travelling abroad, you will need to convert your Indian currency to a foreign one. This requires you to provide details regarding PAN at the time of money exchange at a bureau, institution or bank.
Buying Property with PAN
Buying, renting and selling of property in India requires you to submit your PAN as proof. The PAN details of the seller and the buyer needs to be listed on the sales deed or any such documentation that is related to the sale.
Personal Loan with PAN
All loan providers, whether banks or digital lending platform, such as Loan Singh, require you to submit your PAN at the time of personal loan application. You need to provide your PAN for the loan to be approved.
Loan Singh is a digital lending platform, developed by Seynse Technologies, which allows salaried individuals to apply for a personal loan and do so by submitting their PAN, Aadhaar and 6 months bank statement PDF. The Aadhaar Card and PAN are mandatory documents for loan eligibility and prospective disbursement.
If you plan on investing your money into Fixed Deposits which amount to above Rs.50,000, from a bank, then you need to provide your PAN. This is required as the bank will deduct TDS (Tax Deductible at Source) on the FD interest amount.
If you are making a cash deposit amounting to Rs.50,000 and above, then you will need to submit your PAN. This is with relation to keeping with the RBI mandate. This mandate directs banks to report any large cash deposits to the RBI, preventing any form of money laundering.
Insurance with PAN
As per the directives of the Income Tax department, the PAN card details need to be furnished when making insurance payments exceeding Rs. 50,000 a year.