The importance of Permanent Account
Number (PAN) card has grown over the years, and it is today an essential
part of our lives. The most important purpose of allotting PAN to an
entity is for the purpose of identification
and to track all the related monetary information of that entity.
Initially, the significance of PAN was for filing income tax returns.
Over time, PAN was used in dealings with the stock markets, banks and
purchase of real estate and vehicles.
Today, PAN has started finding use in unconventional areas as well, as follows:
• Bank Fixed Deposits: If you open a fixed deposit with your bank
for an amount exceeding Rs. 50,000, a copy of PAN card needs to be
given. In absence of PAN, the bank will deduct TDS of 20% or at the
prevailing rate, whichever is higher (instead of the normal 10%).
Further, the bank will not issue TDS certificate. Form 15G/15H and other
exemption certificates will be invalid in this case.
• Payment
in Hotels and Restaurants: You may asked to submit a copy of your PAN if
you pay cash in hotels or restaurants against bills for an amount
exceeding Rs. 25,000
• Payment to Travel Agents: Cash payment
more than Rs. 25,000 for travel to any foreign country (fare or purchase
of foreign currency) in a single payment requires you to produce your
PAN copy
• Rental Agreements: Nowadays, landlords demand a copy
of the PAN card of tenants, as the primary ID proof, while letting out
their property.
• Jewellery shops: High-value purchase of
jewellery in cash should be accompanied by a copy of the PAN card of the
buyer, mainly as a means to curb black money usage.
Other usages of PAN include:
• Payment in Second Hand Car Dealings
• Installation of Telephone
• Visa Facilitation Centres
It is seen that quoting or producing a copy of your PAN card is
compulsory in practically every money transaction, and not restricted to
Income Tax dealings. The significance of PAN cannot be questioned as
this has become the primary document sought in all important legitimate
dealings.
Do NRIs require PAN Card?
As PAN is required for
any financial transaction in India, an NRI will need to have a PAN card
if he has an income in India and has to file returns, if he wishes to
invest in India, when he carries out banking transactions, if he
purchases real estate or for any transaction mentioned above.
Beware of PAN Frauds:
The increasing importance of PAN has increased the likeliness of PAN
Card identity theft. The safeguarding of the physical copy of the PAN
card no longer assures that your card is not being misused. As a
majority of transactions demand a photocopy of your PAN card, or simply
quoting the Permanent Account Number, it is very easy for your
information to be misused for high ticket purchases or benami property
transactions. A copy of your PAN card or simply its number can be quoted
in transactions, which you are not even a part of.
Example of
how your information can be misused: Recently, a consumer activist group
revealed that the PAN card copy used in Railway ticket Tatkal bookings
were misused by several jewellers. When an individual produces his PAN
to book the Tatkal tickets, this information is fed in the Indian
Railways system and also displayed on the ticket, reservation chart and
train coaches. Unscrupulous jewellers steal this information from such
public displays and use it to furnish tax collected details while they
sell jewellery of very high value to high-net worth individuals who do
not wish to produce their PAN.
If this happens to you?
When your PAN card is illegally used, you may not even be aware of this
for atleast 6 months after the wrong transaction. You can check for such
benami transactions by going through your Form 26AS, which is a
consolidated statement of tax deducted, along with other details. If you
are a non-tax paying PAN card holder, you may not even be able to check
this form. The Income Tax department will require the PAN card holder
to prove that the transaction was not carried out by him, and also give
details on his source of funds. This becomes very difficult and
time-consuming. As a PAN card holder, you should take care while
disclosing your PAN details to anyone. You must hand over only signed
photocopies and try to reduce using PAN in all casual transactions as ID
proof.
Phonetic PAN (PPAN):
The phonetic PAN (PPAN) is a
new concept introduced to prevent a single PAN being allotted to more
than one assessee with same or similar names. When PAN is allotted, the
PPAN of the assessee is compared with the PPANs of all the assessees to
whom PAN has been allotted in the country. A warning is sounded off if a
matching PPAN is detected. A duplicate PPAN report is then generated. A
new PAN can be allotted only if the Assessing Officer overrides this
duplicate PPAN detection.
Thus the PAN is a key document today and even takes predominance over your name as far as the tax authorities are concerned.