PAN
PAN is a ten-digit unique alphanumeric number issued by the Income Tax Department. PAN is issued in. the form of a laminated plastic card (commonly known as PAN card). Out of the first five characters, the first three characters represent the alphabetic series running from AAA to ZZZ.
BENEFITS OF A PAN CARD
Besides the very prominent Aadhaar card and Voter ID, the PAN card serves as an extremely significant identity proof in several procedures. Besides, it is a mandatory document to have for completion of several following procedures including, but not limited to the ones in the following list.
Probably the most important time when a PAN card is necessary is during IT return filing.
Furnishing your PAN card can help you save on TDS since financial institutions deduct 20% more TDS on Rs.10000+ earned interest if PAN is not quoted.
Linking your bank account to PAN can help you claim a refund if TDS deducted is more than actual tax.
The PAN card is a mandatory identity proof required while opening a new bank account.
Buying and selling immovable assets like property and car worth more than Rs.10 lakh.
Financial transactions worth more than Rs.50000 mandate producing the PAN card.
If you are planning to make investments like those in mutual funds, bonds, and stocks, know how to apply for a PAN card at the earliest if you don’t have one already.
This identification document is indispensable for cash deposits over Rs.50000 in a day.
Payment of life insurance premiums crossing Rs.50000 in a financial year.
That was a list of activities and circumstances where having a PAN card is beneficial for a taxpayer. However, it does not stop there.
An increase in the number of individuals owning a PAN card also benefits Income Tax authorities in the following ways.
PAN cards aid in keeping a record of an individual’s financial transactions and tax liability, hence plugging in more loopholes in the system.
It helps authorities determine the tax rate for every individual based on their income more effectively.
Overall, it helps make more accurate calculations of the total revenue earned from tax in the country.
Individuals without a PAN card, opting for any activity where this document is necessary, can declare the same in Form No.60. However, follow it up with a PAN card application as soon as possible. Before that, check your eligibility for the same.
Eligibility criteria for PAN Card
- If you are still contemplating your PAN card application, here is a list of entities who qualify for PAN card eligibility under Section 139A of the Income Tax Act.
- Every individual with a total annual income exceeding the limit for non-taxable income.
- A business owner with more than Rs.5 lakh annual turnover.
- Every Hindu Undivided Family (HUF), where the Karta or family head is the signatory.
- Any company, whether a sole proprietorship, LLP, AOP/BOI, etc.
- Any charitable organisation, trust, or association.
- Other than this, any minor, who is a potential future taxpayer, has to apply for a PAN card for the minor. From this, you can get a clear idea that there is no bar to application. Almost all Indian citizens and NRIs are required to get this document.
- However, with so many different categories of PAN card holders, authorities have come up with certain segregations to differentiate PAN card types.
What are the types of PAN Card?
Depending on the type of taxpaying entity, PAN cards are divided into several categories. This category can be understood by the 4th character of every PAN, which varies for different entities. Here’s a quick overview of some of the possible alphabets and what they stand for.
- G: Government Agency
- J: Artificial Juridical Person
- P: Individual
- C: Company
- A: Association of Persons (AOP)
- E: Limited Liability Partnership (LLP)
- B: Body of Individuals (BOI)
- F: Partnership Firm
- T: Trust
- H: Hindu Undivided Family (HUF)
- L: Local Authority
If you are looking for ways on how to apply for a PAN card, know that different application forms are available for different entities mentioned in the list. To know in detail about the application procedure, keep reading!
