NEW DELHI : Issued by the income tax department as a unique identity document for taxpayers or income tax assessees, Permanent Account Number (PAN) is nothing but a 10-digit alphanumeric number. All those who are liable to pay tax in India, even minors and foreigners, are eligible to apply for a PAN card.
The income tax department uses PAN to keep a track of all your financial transactions like tax payments, TDS/TCS credits, returns of income, specified transactions, correspondence, etc. It facilitates easy retrieval of your information and matching of various investments, borrowings and other business activities.
Having a PAN card is mandatory in these cases
1) If you are liable to pay income tax during any financial year or want to file income tax returns (ITR).
2) If you are carrying on any business or profession whose total sale, turnover, or gross receipts are or is likely to exceed ₹5 lakh in any year.
3) Besides the above two cases, the income tax department also has a list of transactions where quoting PAN is mandatory. Such examples include selling or buying a vehicle bigger than a two-wheeler, opening a bank account or demat account, applying for a debit or credit card, paying more than ₹50,000 in cash against a hotel or restaurant bill, buying foreign currency or mutual funds worth ₹50,000, etc. The income tax department has 18 such cases, details of which can be read here.
Who doesn’t need a PAN card
1) Minors can quote PAN of their father, mother or even a guardian in case they are not liable to pay income tax.
2) In some cases, NRIs are not required to quote or have a PAN card even while making a specified transaction.
3) If your income is below the taxable limit then you do not need to have a PAN card. To carry specified transactions like opening a bank account, buying mutual funds above ₹50,000, etc, you can sign Form 60 declaring that you do not own a PAN card and the income also is below taxable limit.
PAN-Aadhaar card interchange:
With effect from September 2019, the income tax department has allowed interchangeability of PAN and Aadhaar cards. In case you do not have a PAN card, you can quote your Aadhaar card while filing income tax returns and a PAN card would be generated automatically if it is not linked to a PAN card already.
Whether you have or do not have a PAN card, you are free to quote Aadhaar card wherever you are required to quote PAN according to income tax rules. However, you must make sure that the two are interlinked.
