What is a PAN Card and Why it is needed?
Permanent Account Number or PAN is a 10-digit alphanumeric code issued by the Income Tax Department of India. PAN Card number is essential for various financial activities, such as filing income tax returns, opening a bank account, conducting high-value transactions, and more.
A typical PAN number looks like AQTPP1850C. The fourth letter typically shows your constitution. For instance, if the fourth letter in your PAN is ‘P’, it denotes proprietor or individual. If it’s ‘F’,
then it denotes a firm. ‘C’ stands for company.
PAN is of significant importance in the financial realm for several key reasons. It aids in monitoring a wide range of transactions, ensuring transparency, and preventing tax evasion.
Additionally, it streamlines the retrieval of financial data, simplifying the government’s ability to oversee and assess economic activities. Consequently, PAN is a prerequisite for accessing specific services, including:
- Filing taxes: PAN is primarily used for filing income tax returns. It helps the government track taxable transactions and ensures individuals and businesses fulfil their tax obligations. If you are willing to obtain a GST number, then you need to have a PAN, as GST registration is based upon PAN.
- Opening bank accounts: A PAN card is necessary for opening a bank account, be it a Savings Account or a Current Account. It aids banks in verifying your identity and ensures compliance with regulatory norms.
- Conducting financial transactions: PAN is mandatory for high-value financial transactions, such as Fixed Deposits exceeding a specified amount, purchasing or selling assets like real estate, and investing in securities.
- Applying for Credit Cards: PAN is often a necessary document when applying for a Credit Card. It assists Credit Card companies in assessing your creditworthiness based on your financial history.
- Opening Demat Accounts: PAN is mandatory for opening a Demat Account for trading in stocks and other financial instruments. It ensures transparency and accountability in the stock market and helps in accurate reporting to the taxation authorities.
- Availing of loans: PAN is essential if you wish to apply for loans, be it a Personal Loan, Home Loan or Business Loan. It helps financial institutions assess your creditworthiness and ensures regulatory compliance. Your credit score is generated and reported against your PAN.
- Foreign exchange transactions: PAN is used for foreign exchange transactions exceeding a specified limit. It assists the government in monitoring cross-border financial transactions and prevents illegal activities related to foreign currency.
How to obtain a PAN Card in Simple Steps?
Obtaining a PAN card is a straightforward process, and the government offers the flexibility of applying for PAN through both online and offline channels. Here are the step-by-step instructions for applying for a PAN card online, including the process of applying for a PAN card online using an Aadhaar card:
1. Online application
Step 1: Visit the official PAN website. The official website is of the Tax Information Network of the Income Tax Department i.e., NDSL.
Step 2: Select ‘Apply Online’. In the application type, select the appropriate option.
Step 3: Fill in the form with accurate personal details. Ensure that all information matches your supporting documents.
Step 4: Upload the necessary documents, such as proof of identity (Aadhaar card) address and date of birth. Scanned copies of these documents are usually required.
Step 5: Pay the prescribed fee through online payment modes.
Step 6: After payment, submit the form. A 15-digit acknowledgement number is generated. Store this number for tracking your application and for all future reference.
Step 7: Print the filled application form, affix photographs, and send it to the designated address, along with supporting documents.
2. Offline method
Step 1: Obtain Form 49A from NSDL or UTIITSL centres or download it from the official website.
Step 2: Complete the form with accurate details and avoid any overwriting.
Step 3: Submit the filled form, along with the required documents and the prescribed fee, at the nearest NSDL or UTIITSL centre.
Step 4: You will receive an acknowledgement slip with a 15-digit number. Store this number for tracking your application and for all future reference. The centre will take care of the further processing.
3. Instant e-PAN
The instant e-PAN facility allows you to apply for PAN Card online using Aadhaar Card. The only drawback here is that you won’t receive the physical copy of your PAN at your home. Here are the steps to apply for instant PAN through Aadhaar:
Step 1: Visit the official income tax website. From the ‘Quick Links’, select ‘Instant e-PAN’.
Step 2: Click on the ‘Get New e-PAN’ option.
Step 3: Enter your Aadhaar number and tick the declaration.
Step 4: Check the relevant details and submit the application.
Once you have applied PAN card online using Aadhaar card, you can track your application using your Aadhaar number.
