PAN has become an important document in our lives. You need to provide PAN details while investing for your retirement or buying jewellery, among other things.  It enables the government to track all your financial transactions and helps in checking whether your taxes and major financial expenses are consistent or not.  If you don't have a PAN, remember to make a declaration by submitting duly filled Form 60 while doing transactions which mandatorily require .  Section 272B of the I-T Act deals with penalties related to non-compliance with PAN-related provisions.

1. B Y
C O L M U K T E S H W A R P R A S A D ( R E T D )
Why Permanent Account
Number(PAN )IS Necessary?

2. Introduction
 PAN has become an important document in our lives.
 You need to provide PAN details while investing for your retirement or
buying jewellery, among other things.
 It enables the government to track all your financial transactions and helps in
checking whether your taxes and major financial expenses are consistent or
not.
 If you don't have a PAN, remember to make a declaration by submitting duly
filled Form 60 while doing transactions which mandatorily require .
 Section 272B of the I-T Act deals with penalties related to non-compliance
with PAN-related provisions.
 A Rs 10,000 penalty can be slapped on a taxpayer for not obtaining PAN
when he is entitled to one, or knowingly quoting incorrect PAN in a
prescribed document or intimating incorrect PAN to the person deducting
or collecting the tax.

3. Uses of PAN
 Here are some more uses of the 10-digit alphanumeric number, which might
come in handy to you:
 1. To avoid higher deduction of taxes at source: Not updating or
providing PAN details in your savings bank account may attract Tax
Deduction at Source (TDS) at the highest marginal rate.
 For accounts where the annual interest payment exceeds Rs 10,000 and
PAN details are not provided, the bank can deduct TDS at the rate of 30
per cent.
 2. To avail House Rent Allowance (HRA) tax benefit: If you're living
on rent and paying over Rs 1 lakh per annum then it is mandatory to provide
your landlord's PAN to your employer to avail HRA tax benefit.
 3. For investing purposes: If you're investing over Rs 50,000 in mutual
funds (MFs), bonds or debentures, you need to provide your PAN details.
 While investing, you have to undergo a one-time Know Your Customer (KYC)
process, which requires a photograph, identity (ID) and address proof.
 PAN card serves as an ID proof and is mandatory for almost all investment
products.

4. Uses of PAN…
 4. To carry out business or profession: If you're carrying out any
business or profession where annual sales or receipts total exceeds Rs 5 lakh
then you need a PAN.
 5. To receive a refund from Income-tax (I-T) Department: Well, you
know that to pay your I-T dues, you need to file your returns.
 However, to receive the refund in excess of the tax deducted from your
taxable income, you also need to file I-T returns for which PAN is
required.
 6. Buying a car: Did you know that for buying or selling a car, it is
mandatory for you to provide PAN?
 However, this rule is not applicable for two-wheelers.
 7. Opening a bank account: As per the I-T website, it is mandatory to
quote your PAN while opening a bank account.
 However, a Basic Savings Bank Deposit Account (BSBDA) is exempted from this
rule.
 BSBDA is a savings bank accounts in which the total credits must not exceed Rs 1
lakh per annum, subject to other conditions.

5. Uses of PAN…
 8. Opening a demat account: For people trading in share markets, it is
mandatory to have a dematerialised (demat) account.
 And without a PAN, you cannot open a demat account.
 9. Investing in fixed deposit (FDs): If you're planning to invest over Rs
50,000 or aggregate of more than Rs 5 lakh in a financial year in a time deposit/FD of
a bank, post office or a Non-baking Financial Company (NBFC) then you're
mandatorily required to quote your PAN.
 10. Purchase of foreign currency in cash: If you're planning to travel
abroad then you need to carry foreign currency with you.
 As per the I-T website, if you make a payment of over Rs 50,000 with respect to
any foreign travel or for the purchase of any foreign currency at any one time then
you must also provide your PAN while making these payments.
 11. Applying for credit/debit card: Remember when you applied for your
favourite swipe card during demonetisation, you were required to provide your PAN
details?
 12. Paying hotel/restaurant bill: As per I-T Rule 114B, it is required by you to
quote your PAN for cash payment over Rs 50,000 for paying your hotel or restaurant
bill, or bills at one time.

6. Uses of PAN…
 13. Investing in Reserve Bank of India (RBI) bonds: While investing
over Rs 50,000 in RBI bonds, you are required to provide your PAN, along
with other details.
 14. Depositing cash in the bank: If you're planning to visit the bank soon
to deposit cash then don't forget your PAN card at home.
 For depositing cash over Rs 50,000, you need to mention your PAN while filling
the pay-in slip.
 15. For the purchase of bank drafts, pay order or banker's
cheque: At times you are required to make some payments either through
bank drafts, pay orders or banker's cheque.
 If you purchase these instruments in cash for an amount exceeding Rs 50,000
during any day, you're required to quote your PAN.
 16. Buying a gift card or other prepaid instruments: Prepaid
instruments are payment instruments that facilitate the purchase of goods and
services, including funds transfer against the value stored in them.
 Any payment made via cash or any banking instruments like cheque or draft for
the amount exceeding Rs 50,000 on aggregate for the financial year for one or
more prepaid instruments requires the quoting of PAN, as per RBI guidelines.

7. Uses of PAN…
 17. For making premium payments: Every individual makes some
investments to save tax under Section 80C of the I-T Act. Some make investments in
Equity Linked Savings Schemes (ELSS) funds, while others buy life insurance
policies.
 Rule 114B states that every person is required to quote PAN details for making life
insurance premium payments over Rs 50,000 in a financial year on an aggregate.
 18. Transaction of securities other than shares: Rule 114B states that the
sale or purchase of any security other than shares such as scrips, bonds, debenture or
any other marketable securities as listed under the Securities Contracts (Regulation)
Act, 1956, over an amount of Rs 1 lakh per transaction requires PAN card as a
mandatory document.
 19. Transaction of unlisted shares: Any sale or purchase of unlisted
company shares exceeding Rs 1 lakh per transaction requires PAN card
details to complete the required transaction.
 20. Immovable property transactions: Planning to buy or sell any
immovable property such as a house?
 Rule 114B requires every person involved in the sale or purchase of any
immovable property exceeding Rs 10 lakh to provide his PAN details.

8. Uses of PAN…
 21. Sale/purchase of any goods & services: Rule 114B also states that
any sale or purchase of good and services other than specified in the rule
whose transaction value exceeds Rs 2 lakh per transaction mandatorily
requires one's PAN card.
 22. Investment in minor's name: If you're planning to make some
investments in your children's name then the guardian PAN number is
required.
 However, the child must not have any income chargeable to tax.

9. NRIs and PAN Number
 Non-Resident Indians (NRIs) are exempted from providing their PAN in the
following instances:
a) Applying for debit or credit card
b) Making cash payments for hotel and restaurant bills
c) Any payment made for foreign travel or foreign currency exchange
d) Payment made for acquiring RBI bonds
e) Payments made to purchase any drafts, pay order or banker's cheque
f) Payment made for prepaid instruments
g) Sale or purchase of any good and services not mentioned in Rule 114B