While the PAN card was introduced with the primary objective of identifying an individual from a taxation point of view, it also serves other purposes.
1. Valid Identity and Photo Proof
A PAN card is accepted and produced as a legitimate ID proof across the country for various purposes such as for an application for a passport, ration card, voter ID card, utility connection such as gas and electricity etc.
2. At the place of employment
Employers require the PAN details of their employees for the purpose of taxation. Employers need to deduct necessary taxes such as TDS, Professional Tax etc. They also require the PAN card details to show their payments to employees, in the form of salary income, at the time of filing their Income Tax returns.
3. Dealings with Banks
One of the pre-requisites while opening a Bank Account or to avail any kind of financial services is the individual’s PAN Card. This is true irrespective of the type of Bank – Public, Private, Co-operative, etc. In an attempt to eradicate money laundering and black money, banks are required to keep a check on all high-value cash transactions and report to the RBI as the prescribed norms, on a periodic basis. Any cash deposit exceeding Rs. 50,000 with a single banking institution in one day requires the PAN details to be furnished. Also, at the time of opening a Fixed Deposit, whose value is equal to or more than Rs. 50,000, the PAN details are required. This is so because the banks are liable to deduct TDS on the interest earned on such FDs.
After the demonetization drive in November 2016, an amendment was made in the Income Tax rules and all banks were asked to procure and link PAN or Form 60 (In cases where PAN was unavailable) to all the existing bank accounts. The only exception being zero balance saving accounts or Basic Savings Bank Deposit Accounts (BASDA) and the accounts under the recently started financial inclusion program – Pradhan Mantri Jan Dhan Yojana (PMJDY). This activity was to be completed by February 2017.
Also, the government has ensured that individuals resorting to fraudulent practices such as making multiple deposits of amounts less than 50,000 to escape compliance with statutory provisions, will also be tracked and dealt with accordingly.
4. Post Office Deposits
Similar to the FDs with Banks, PAN Card is a mandatory requirement while opening a deposit of Rs. 50,000 or more with the Post Office Department as well.
5. Foreign currency exchange
For foreign travels, in order to get money exchanged for foreign currencies, along with a copy of the visa, tickets, passport, etc, travelers need to provide a copy of the PAN Card as well.
6. Share Trading
PAN details need to be furnished to the brokers along with the Demat and Trading account provider, for the purpose of trading of shares.
7. Mutual Funds and other securities
Similar to share trading, any request to open mutual fund investments or investment in debentures, bonds etc. need to be supported with the PAN details of the investor.
8. Property Transactions
Both the buyer as well as the seller need to provide their PAN details at the time of the registration of the property as well as for finalizing the sales deed. In a case of a property with joint ownership, it is mandatory to quote the PAN details of both the owners. Any transaction related to sale or purchase of an immovable property requires the PAN details when the value of such deal is or exceeds Rs. 5 Lakhs.
9. Credit or Debit Card
PAN details are a mandatory pre-requisite for the application of Credit as well as Debit Cards. The card applications cannot go ahead without this detail and will get rejected. Such rejections also have a negative bearing on the credit score of an individual as well as can create a problem in the future for application of loan, etc.
10. Loan Applications
All loan applications such as personal loan, home loan, etc. require the PAN details of the requestor to be provided.
11. Payment Wallets
In this age of demonetization, payment wallets have gained a significant place in the way monetary transactions are done. Various payment wallets such as Paytm, Mobikwik, etc. require this detail to be shared for their KYC purposes, if the user wants to make transactions beyond the specified limit of Rs. 20,000 per month
12. Purchase of Vehicle
For all vehicle transactions (sale or purchase) excluding two- wheelers, which fall under the ambit of registration as per the Act for Motor Vehicles, require the PAN details to be shared.
13. Payment of insurance premium
It has been instructed by the Central Board of Direct Taxes (CBDT) that the policyholder needs to provide his / her PAN details at the time of paying the premium to the insurance companies, for amounts more than Rs. 50,000 in a particular year.
14. Jewelry purchase
Buyers need to furnish their PAN details at the time of making jewelry or bullion purchases for amounts exceeding Rs. 5 Lakhs.