Posted by Greetings from Classic Associates! Tuticorin
1. IT Returns Filing
All individuals and entities who are eligible for Income tax are expected to file their IT returns. A PAN card is necessary for filing of IT returns, and is the primary reason individuals, as well as other entities, apply for one.
2. Identity Proof
PAN card serves a valid identity proof. Other than voter card, Aadhaar card, PAN card is also accepted by all financial institutions and other organisations as an identity proof.
3.Tax Deductions
One of the essential reasons to get a PAN card is for the purpose of taxation.
If the entity or person has not linked the PAN number with his bank account, and the annual interest earnings on savings deposits is more than Rs. 10,000/- then the bank would deduct 30% TDS instead of 10%.
4.Claiming Income Tax Refund
Many times, the TDS deducted from a taxpayer’s income is more than the actual tax that he is supposed to pay. In order to claim excess tax paid, taxpayer has to have a PAN linked to his bank account.
5.Starting a Business
In order to start a business, a company or any other entity mandatorily needs to have a PAN registered in the name of its entity.
Tax Registration Number is needed for a business which is obtained only if the entity has a PAN.
6. Opening a Bank Account
All public, private and co-operative banks have made it mandatory for an individual or a company to have a bank account in its name in order to open a savings or current account.
Only under Pradhan Mantri Jan Dhan Yojana, a person can open a zero balance account by using voter card or other identity proof.
7.Opening Demat Account
PAN card is also mandatory for an individual or entity to open a Demat Account, which is needed to hold shares in dematerialized form.
8.Purchase & Sale of Immovable Assets
One of the benefits of pan card is eligibility of an individual or entity to enter into transactions of sale or purchase of assets.
PAN is required to be quoted in the deed made during sale or purchase of any immovable property valued at 10 lakh rupees or more.
9. Purchase or Sale of Goods and Services
Purchase or sale of any good or service for an amount more than Rs. 2 lakh per transaction will require PAN to be furnished
10. Bank Drafts, Pay Orders and Banker’s Cheque
PAN card is needed for Bank Drafts, Pay Orders and Banker’s Cheque with a transaction more than Rs 50000/- in a day. This implies that the transactions more than 50000/- will only need PAN card.
Benefits to Income Tax Authority
1. A PAN card helps the Income-tax Authority in keeping a track of all financial transactions that may be essential in assessing an individual or companies tax liability, it helps in reducing the chances of tax evasion. The pan card has the person’s name, date of birth and photograph and is also accepted as an identity proof for its holder.
2. The PAN number is unique to every entity who holds a PAN card. The name and address may change or the card may get lost or stolen but the PAN number will still remain unchanged. So, the possibility of misuse is minimal.
3. A minor account can be opened easily with the PAN card of his or her guardian
4. It is a useful tool to anticipate the total tax revenue being generated in India
5. It helps in fixing the rate at which an entity should be taxed based on its earnings.