The Permanent Account Number is issued by the Income Tax Department, and it is one of the most important documents in the country due to its large benefits. If you wish to convert Indian currency into a foreign currency, open a demat account or open a bank account, you'll be required to provide PAN details.
Importance Of PAN Card
The main motive behind issuing PAN card was for making tax calculations simplified for the Income Tax Authorities. Since the PAN card holds all the information regarding the financial transactions of an entity, it is necessary to provide your PAN card details while filing for Income Tax returns. The Income Tax Act of 1961 states that people who are not the residents of the country such as NRIs(Non-Resident of India), OCIs(Overseas Citizen of India) and PIO(Person of Indian Origin) are eligible for applying for PAN card. Companies, firms and governments can also apply for PAN card.
Uses of PAN
There are many uses of PAN card. It is one of the primary documents required in many official procedures. Your PAN card details could act as your identity proof and could help you in tracing your transactions.The card can be used to avoid tax evasion and helps the Income Tax Department to trace back all the financial transactions that you make on a daily basis. Whether you’re planning on buying a new property, wish to apply for a home loan or even credit card, you need to provide your PAN card details to complete any of these procedures. However, there are many other uses of PAN card apart from tracing your financial transactions.
Here are some of the uses of PAN card:
- IT returns filing: You need to provide your PAN card details to file Income Tax returns. You need to fill your PAN details on the given space and you can file Income Tax online by visiting the e-filing website.
- Opening a bank account: Since bank accounts are the primary medium for tracking anyone’s financial transactions, in order to open a bank account you need to provide your PAN card details
- Applying for a credit/debit card: Applying for a credit/ debit card also requires the applicant to submit their PAN details.
- Buying/selling a vehicle: Buying or selling a vehicle also requires you to provide your PAN card details, because the ownership of the vehicle changes.
- Acts as a identity proof: PAN card is considered as a necessary document in many official procedures, so it's important to own a PAN card for someone involved in frequent financial transactions
- Applying for loans/insurance: Providing loans/insurance is linked with a high risk factor on the bank’s side. If the loans are not paid back by the borrower, the bank would stand to lose a large sum of money or assets. To analyse the risk linked with granting loans, it's important for the banks to take a look at the applicant’s financial transactions and figure out whether he/she is eligible for the loan.
- Used for buying/selling/renting property in India: If you wish to make any transactions linked with a property, you will be required to provide your PAN details.
- Useful in currency conversion: PAN card is considered to be a mandatory document while making conversions from Indian to a foreign currency.
- Used in the purchase of precious metals