PAN Card for Individuals
The income accumulated by an individual can be segregated into two heads-earned and unearned income. Earned income includes the salary earned by the individual and the unearned income includes the additional benefits that are procured by the individual/entity from the government. The earned income is taxable under the law while the unearned income is not taxable since it includes the unilateral transfers from the government like pensions, schemes etc. The cash gifts, money received under pension schemes and rewards come under the unearned salary section. This type of salary is not taxable.
Benefits of PAN card
PAN card is mandatory for the completion of many official procedures. There are a number of benefits of PAN card, few of them are listed below:
- Sale/purchase of immovable commodities within the country
- Purchase of automobiles other than two-wheeler
- To purchase banker's draft and cheques
- To purchase pay orders
- Purchasing shares worth more than 1 lakhs
- To make a deposit of more than 50,000
- To open a demat account
- To get a credit card
- To enter into financial transactions
- Can be used as a valid ID proof
- For business/individual not based in India, it is relatively easy to undergo financial transactions when you own a PAN card
- To open the account of students and minors
Importance of PAN card for income tax authorities
PAN is a 10-digit alphanumeric code that acts as an identity proof for many people in the country. The PAN card is issued by the Income Tax Department. There are multiple avenues through which an individual/entity can apply for PAN. Companies like NSDL and UTIITSL have been authorised by the IT Department to carry out the processing of a PAN card. One of the primary benefits of PAN card is that it is used for Tax calculations. Since all the information regarding financial transactions undergone by an entity are enclosed in a PAN card, it's obvious that PAN card is a mandatory document while filing Income Tax returns.
- Used as an identity proof
- Used to determine which income tax slab is applicable to an individual/company
- Makes it easier for the authorities to track income earned by individuals/companies
Amendments to PAN rules
- Individuals making transactions of more than INR 50,000 on hotel bills and foreign travels are required to furnish their PAN card
- PAN card is mandatory for purchase of jewelry worth more than 2 lakhs
- PAN cards are necessary for buying immovable property worth more than INR 50,000
- PAN cards are mandatory for making cash deposits worth more than INR 50,000
Changes in PAN card transactions
To streamline financial transactions in the country, the Government of India made some changes in the PAN card transactions above INR 2 lakhs and it's effective since the beginning of the year 2016. The main objectives of the changes introduced in PAN card were to curb the black money flow and widen the taxpayer’s base.
PAN card was made mandatory for the following financial transactions-
- Sale and purchase of immovable property worth more than INR 10 lakhs.
- PAN card is mandatory for the purchase of four wheeler, however, it's not mandatory for the sale/purchase of a two-wheeler.
- It is necessary for an individual to own a PAN card for opening a bank account.
- Cash payments of more than INR 50,000 during foreign travels require the individual to own a PAN card.
- It is necessary for a policy-owner to mention his/her PAN details if the premium tends to exceed more than INR 50,000.
- ANy fixed deposit in a bank account exceeding an amount of INR 50,000 needs to be backed by PAN details.
- Quoting of PAN details is necessary for an individual making a cash deposit of more than INR 50,000 in a single day.
- Furnishing a PAN card is also mandatory for an individual buying gold jewelry worth more than INR 2 lakhs
- An individual who wishes to purchase stocks in an unlisted company or open a DEMAT account needs to own a PAN card