PAN Card- Classification, Uses & Benefits
|Permanent Account Number or PAN Card is a card comprising of 10 digit alphanumeric characters and is issued by the Indian Income Tax Department under the Income Tax Act of 1961.
It is issued to all the tax payers in the country.
It is an electronic system used to record all tax related information of a person or company to which it is issued.
No two entities in India can possess a same PAN card.
It plays an important role in all financial transactions undertaken by an individual or an entity like opening a bank account, buying and selling assets, etc.
It can however not be used as a proof of Indian citizenship.
Before moving to the uses and advantages of a PAN card, let us first discuss a bit about its classification.
First five figures of your PAN card are alphabets, the next four characters are numbers which are again followed by a last character which is again an alphabet.
Each set of character holds a significance in your PAN card number.
- The first three characters of your PAN Card number are randomly assigned by the Income Tax Department and are a combination of letters like CFM or ATZ.
- The fourth character in the PAN card number
denotes the status of the holder of card. It is one of the most important
character and is usually letter “P” which stands for ‘person’. The other
letters used as the fourth character are as follows:
- C for Company
- H for Hindu Undivided Family
- F for Firm
- A for Association of Persons
- T for Trust
- B for Body of Individuals
- L for Local Authority
- J for Artificial Judicial Person
- G for Government
- The fifth character in your PAN card number is the initial letter of the surname of the PAN Card holder like if the name of the PAN Card holder is Preeti Sharma then the fifth character in this case will be letter “S”. If your surname changes say after marriage, the PAN Card number remains unchanged.
- These next four characters are digits which are randomly assigned.
- The last and the tenth character is an alphabet which is a check digit and can be any alphabet.
Apart from the PAN Card number the PAN Card holds the following information as well- Name of the PAN Card holder, Name of Father in case of individual card holders, Date of Birth of the PAN Card holder or Date of Registration of the Company, Signature and photograph of the PAN Card holder.
USES OF PAN CARD
A PAN card can be used for following purposes by individuals or companies:
- Having a PAN Card is essential for filling an ITR (Income Tax Return) by both individuals and entities. This is the primary reason why PAN card is applied for.
- PAN card is required for opening a new bank account irrespective of whether the account being opened is savings account or a current account. You need to possess a PAN Card if you wish to open a bank account either in a public bank or a private bank.
- Having a PAN Card is essential for buying or selling a vehicle which is about Rs.5,00,000 of worth.
- PAN Card is necessary not only for opening a bank account but also for applying for a debit or a credit card.
- If you wish to buy or sell a jewelry more that Rs.5,00,000 of worth then you need to have a PAN Card.
- PAN card is required for investing in securities be it mutual funds, equities, bonds etc., if the amount of investment is more than Rs. 50,000.
- You need to provide your PAN card details if you are travelling abroad and want to convert Indian currency to foreign currency.
- PAN Card details for both buyer and seller of property are required for the purpose of documentation in case of buying, selling or renting of property.
- You need to submit your PAN card details to banks and financial institutions if you are filing a loan application.
- If you wish to invest more than Rs.50,000 in Fixed Deposits you need to provide your PAN card details for the purpose of TDS deduction on FD amount.
- If you are making a payment of more than Rs.50,000 towards Insurance in a year you need to furnish your PAN card details.
ADVANTAGES OF PAN CARD
Following are the benefits that a PAN Card has for its holder:
- You can easily buy and sell property of value more than rupees 10 lakhs if you have a PAN Card
- PAN Card is required by taxpayers to file for an income tax refund.
- It is mandatory to have a PAN card if you wish to start your own firm.
- It is required for tax deduction at source in case of FD which is 10% if you hold a PAN card and 20% in case you don’t hold a PAN card.
- It is essential for requesting for a pay order, drafts and cheques.
- You need to have a PAN card for making a payment of hotel or restaurant bill if it is above Rs. 50,000.
- PAN card is required for opening a demat account.
- It has the lowest chances of misuse as it can’t be changes even if it is stolen or lost.
HOW TO APPLY FOR A PAN CARD
You can easily apply for a PAN card online by visiting the NSDL or UTITSL website by following few simple steps. Let us discuss how to apply for a PAN Card via NSDL.
- Go to the NSDL website. It is issued by the concerned authority to issue a PAN Card.
- Go to the Online PAN Application form.
- In the Application type select the option New PAN- Indian Citizen (Form 49A).
- If you are a foreigner select New PAN-Foreign Citizen (Form 49AA).
- Select the category of the PAN card you need like individual, company, trust etc.
- Fill your personal details like name, DOB, mobile number, enter the given captcha code and click on submit.
- Verify the information either through Aadhar authentication or by scanning and uploading the documents. You can also verify the information by submitting physical documents.
- If you choose Aadhar authentication you just need to enter the OTP sent on your registered mobile number.
- Enter the details like Aadhar number and click ‘Next’.
- Fill your personal details again as they will be asked for. Click Next.
- Choose the AO code out of the four given options.
- Select your state and residence area. You will get a list of AO Codes. Select the one that suits you the best and click ‘Next’.
- Select the documents that have been submitted by you as a proof of age and residence fill the required details and click submit.
- Make the payment for the application fee which is Rs.120 including the online transaction charge.
- After the payment is done enter the OTP for Aadhar authentication, or submit the documents either e-signed or physically. You will receive an acknowledgement mail from NSDL about your application for the PAN card and the PAN card will be sent to you once the application has been processed.
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