The PAN Card was introduced to help the IT Department fight tax evasion. This unique 10-digit number offers a streamlined approach to tracking each taxpaying entity’s investments, transactions, TDS, and more. In other words, it offers a comprehensive record of all essential tax-related details in one database.
PAN Card holders in India have access to various services, including the facility to open a bank account, make fixed deposit investments (above Rs. 50,000), purchase motor vehicles, and more. This article explores the various benefits of having a PAN Card in India.
Benefits of having a PAN Card
Whether you are an individual, company, or trust, there are several benefits of having a PAN Card. We’ve listed 6 top ones below:
Filing ITR and claiming returns
Individuals and other entities that earn taxable income in India must file IT returns. Your PAN Card records all your transactions and therefore plays a vital role in filing IT returns. Moreover, TDS deductions on your income are recorded against your PAN. You are eligible for a tax refund if the TDS deducted is more than what you need to pay. You can only claim this refund if you have a valid PAN Card linked to your bank account.
Starting a business
Having a PAN Card is also essential when you wish to start a business. According to the Income Tax laws, every business entity must have a valid PAN. Companies need to have a TRN or Tax Registration Number which can be quoted to whoever is paying them. Acquiring a TRN is only possible if your business has a PAN. In fact, TRN may also be needed to register your business for sales on online marketplaces.
Investing in securities
If you wish to trade in securities and seize wealth accumulation opportunities, you must have a valid PAN. According to SEBI, you cannot open a Demat account without a PAN Card. Since your Demat account holds your shares in an electronic format, failing to open one will restrict you from participating in the market as well. Similarly, PAN details are needed if you want to invest more than Rs. 50,000 in securities like stocks, mutual funds, bonds, and debentures. Simply put, having PAN allows you to participate in the securities market and reap growth benefits.
Purchase property
PAN also facilitates the sales and purchase of property. If the value of the immovable property exceeds Rs. 10 Lakhs, both the buyer and seller need to provide PAN details. As per Section 194IA of the IT Act, the buyer of the property must also deduct TDS at 1% of the sale amount if the property cost is over Rs. 50 Lakhs. The seller can claim this TDS amount recorded against their PAN while filing ITR.
Access to credit cards and loans
You may need access to credit to purchase your dream home or fund your wedding. Similarly, you may want to apply for a credit card to make large purchases with deferred payment and build your credit score. However, availing any of these credit lines requires you to furnish your PAN details. You must provide PAN details while filling in the application form for a new credit card or loan, else the bank or NBFC can reject your application.
Exchange currency
If you have a vacation planned abroad and need to exchange currency worth Rs. 50,000 or more, you can only do so with an active PAN. In fact, you also need PAN details to complete international money transfers in India. PAN helps record transactions falling under the LRS (Liberalised Remittance Scheme) and ensures compliance with tax laws. It helps track foreign currency dealing, preventing misuse, and fostering transparency.
Conclusion
In a nutshell, a PAN Card is an essential document that serves various purposes. At its core, it helps the IT Department keep track of your taxes and transactions to ensure better transparency and minimise chances of tax evasion. If you have a PAN in India, you qualify for accessing a wide range of services and benefits, including claiming ITR refunds, starting a business, investing in securities, obtaining loans, and exchanging currency.