Advantages of PAN Card in India and How to Apply for PAN Card

PAN stands for Permanent Account Number. It is a ten-digit alpha-numeric number issued by the income tax department. It is mandatory to have a PAN if you are undertaking financial transactions like receiving salary, professional fee and sale or purchase of assets above specified limits. It is highly recommended that you should have a PAN even if your income does not fall within the taxable brackets. It is also mandatory for businesses to have a PAN card if their turnover or gross receipt exceeded 5 lakhs in the previous financial year.

Why should you have a PAN card?

A PAN card allows the government to keep a track of all financial transactions that may be critical from assessing an individual or companies tax liability, it helps in bringing down the chances of tax evasion. The pan card has your name, DOB and photograph, it also serves as a nationally accepted identity proof for its holder.

The PAN card comes in handy when you purchase an automobile, buy or sell immovable property, buy shares or debentures exceeding 1 lakh, want to open a new bank or demat account or while applying for a credit card and several other transaction types.

Top 10 Advantages of PAN Card

There are several advantages of PAN card for an individual or company. The key benefits of PAN card are listed below:

1. Tax Deductions: One of the most important benefits of having PAN card is for taxation purposes. If you haven’t linked your PAN number with your bank account, and your annual interest earnings on savings deposits exceeds Rs. 10,000/-, then the bank would deduct 30% TDS instead of 10%.

2. Starting a Business: PAN for companies was made mandatory by the Indian Government as per the Income Tax Act, 1961 which was implemented in 2010. A company also has to provide their TRN (Tax Registration Number) to whoever is paying them. A TRN can be obtained only if you have a PAN. Several eCommerce websites mandate a TRN for companies to host and sell their products on their platform.

3. Claiming Refunds from Income Tax (IT) Department: You need to file for an Income Tax Return every year. The return document itself is used for many purposes like checking your credibility during a bank loan. You may be eligible for a refund if your TDS is higher than the amount of tax you actually need to pay. If you are eligible for a refund, then you need a PAN card linked bank account to claim your refund.

4. Buying a Car: A PAN card is a mandatory document if you are buying or selling a four wheeler. It is also mandatory to have a PAN card if you intend to take a loan to buy your car. However, a PAN card is not necessary if you are buying a second-hand car (for now). You can use a Form 60 instead of a PAN. However, the rules are set to change in the near future so it is best to have things on record.

5. Opening a Bank/ Demat Account: As per the current rules, you cannot open a bank account if you don’t have a PAN card. The only exception to the rule is if you are opening a zero balance account under the Prime Minister Jan Dhan Yojna where you can use a Voter ID Card or Ration Card as proof of identity to open an account. A Demat account or Dematerialized account holds all your shares in dematerialized or electronic format, and to open such an account you need a PAN card.

6. Making Investments, Buying RBI Bonds/ Insurance: KYC or Know Your Customer norms were introduced under the Prevention of Money Laundering act to ensure that funds used for investment came from a legal source. Before you can invest, you will first have to get a KYC by filling out a form available on the AMFI (Association of Mutual Fund of India) website, attach a self-attested copy of your PAN card and an address proof. Once you are KYC compliant, it is understood that you have a PAN card and hence the KYC document is accepted when you are making investments. Investing Rs. 50,000/- or more in RBI bonds also mandates a PAN Card.

7. Purchasing Foreign Currency: For buying foreign currency above Rs. 50,000/- or more. Under the Foreign Exchange Management Act, a PAN is required. This is because all transactions involving foreign currency are classified under capital or current account transactions.

8. Transaction of Securities (Listed or Unlisted): According to the Securities Contracts (Regulation) Act, 1956, a purchase of any security (listed or unlisted) other than shares, bonds debentures and other marketable securities requires a PAN card. This is applicable if your per transaction amount is above Rs. 1 lakh. Any sale or purchase of unlisted company shares over the value of 1 lakh also mandates a PAN card.

9. Bank Drafts, Pay Orders, Bankers Cheques, and Cash Deposits: While a PAN is mandatory if you have to open a new bank account, you will also need to show your PAN Card if you want to make bank drafts, pay orders, banker’s cheques and cash deposits above the Rs. 50,000/- limit. This is true even if you want to deposit more than Rs. 50,000/- in cash in your own account.

10. Sale/ Purchase of Immovable Property: If you are buying or selling a house which is worth is more than Rs. 10 lakhs, you would be required to provide your PAN details.

How to Apply for a PAN Card?

No long-winding queues or complex follow-ups. Applying for a PAN can now be done online in a few simple clicks – if you have the relevant documents handy. All documents should be valid at the time of applying for the PAN card. Here’s a list of what you need:

1. Photo ID Proof: Acceptable photo id proofs include Voter ID, Aadhaar Card, Driving Licence, Passport copy, ration card with applicant photo, bank’s certificate, arms licence, ex-serviceman health card, certificate of identity, certificate from Gazetted officer, pensioner card with photo or an ID Card issued by central or state government bodies.

2. Proof of Birth Date with Month & Year: Acceptable proofs of date of birth include Voters ID card, Aadhaar card, Driving Licence, Passport copy, matriculation certificate, mark-sheets from a recognized board, marriage certificate, pension payment order, ID Cards issued by central or state government bodies, domicile certificate issued by the government, affidavit sworn before a magistrate or birth certificate from a municipal authority.

3. Address Proof: Acceptable address proofs include Voters ID card, Aadhaar card, driving licence, passport copy, bank statement / credit card statement, electricity or water tax bill, gas connection card, piped gas bill, broad band bill, land line bill, employer certificate, domicile certificate issued by the government and post office pass book.

PAN Card Application Process

The online application for PAN card can be made through the NSDL Portal Link or UTITSL Portal Link. The charges for applying for a PAN card are Rs. 107/- including service tax if you are a resident of India. If you reside outside India, the charges are Rs. 994/-. The payment can be made through credit/debit card, demand draft or net-banking. Once you finish the online application, you will have to send the supporting documents by courier to NSDL / UTITSL. One the receipt of your documents, your application will be processed and your PAN card will be delivered to the communication address you specified during the application process.

PAN Card Re-Issuance in case of Loss, Damage or Change of Address

• Know your PAN Number: Retrieve your PAN number from the income tax website if you've forgotten it.
• File an FIR: Report the loss or theft of your PAN card and obtain a copy of the FIR to prevent misuse.
• Re-Apply Online: Visit the provided link, select your category, fill in your existing PAN number, and pay a fee of Rs. 107/-. Ensure to update your address details.
• Submit Required Documents: Along with the application, send a copy of the FIR, self-attested passport photo, valid address proof, and PAN proof to NSDL.
• Track Application Status: Monitor the progress of your PAN card application online or contact NSDL helpline for assistance.
• Offline Application: If preferred, obtain the application form from the provided link and submit it offline.
• Receive New PAN Card: Once processed, your new PAN card with updated details will be issued, retaining the same PAN number.
• Importance of PAN Card: Highlight the significance of PAN card for accessing various services and encourage those who haven't applied yet to do so.

National Securities Depository Limited,
3rd Floor, Sapphire Chambers,
Near Baner Telephone Exchange, Baner,
Pune, 411045 - INDIA.

NSDL helpline on 020-2721-8080

Frequently Asked Questions

1. Why is a PAN card necessary?

A PAN card is essential for filing income tax returns, conducting major financial transactions, opening bank accounts, applying for loans, and serving as a valid proof of identity.

2. What happens if a PAN card is not used?

If a PAN card is not used, higher TDS rates may apply on income, and you may face difficulties in financial transactions, tax filings, and obtaining credit or loans.

3. How long is a PAN card valid?

A PAN card is valid for a lifetime and does not require renewal.

4. What is the misuse of a PAN card?

Misuse of a PAN card can include identity theft, fraudulent financial transactions, and tax evasion using someone else's PAN details.

5. Can I open a bank account without a PAN card?

Opening a bank account without a PAN card is possible but may be subject to restrictions and limitations. In some cases, you can use Form 60 as an alternative, but it is not applicable for all types of accounts and transactions.

6. How can I download an e-PAN card online?

You can download an e-PAN card online by visiting the official NSDL or UTIITSL website, providing your Aadhaar number, and following the on-screen instructions for e-PAN download. Ensure you have your OTP for verification.