Whether you earn money, open a bank account, or make a major financial transaction, a PAN card is your biggest need. It is a 10-digit alphanumeric number issued by the Income Tax Department, which is overseen by the Central Board of Direct Taxes (CBDT).
A PAN card not only helps in paying taxes, but also determines your financial identity. Be it buying or selling property, investing in mutual funds, or banking transactions, many major financial tasks cannot be done without a PAN card. So let us understand in a simple language where a PAN card is necessary and how it makes your life easier!
Mandatory in filing tax returns
If you file income tax (Income Tax Return – ITR Filing), then a PAN card is the most important document for you. It confirms your identity and tracks your tax records. A PAN number is mandatory while filing an Income Tax Return (ITR).
Also, if TDS (tax deduction at source) is deducted from your salary or any other income, it is useful in claiming a refund. Now the government has given another facility that if you do not have a PAN, you can file an ITR with an Aadhaar card, but the importance of a PAN card remains.
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From opening accounts to big transactions
If you are opening a savings account, current account, or fixed deposit account (Fixed Deposit – FD) in a bank, then a PAN card is mandatory. If you deposit or withdraw more than ₹ 50,000 in cash in a day, the bank may ask you for a PAN card.
If you apply for a credit card or loan, the bank looks at the PAN card to check your financial history and CIBIL score. Apart from this, a PAN number is also required for a correct tax deduction on interest received from your savings account or fixed deposit.
Keeping an eye on your every investment
If you want to trade in the stock market or invest in mutual funds, then you must have a PAN card. From opening a demat account to buying mutual funds worth more than ₹ 50,000, it is required everywhere.
This is necessary so that a proper record of your investment can be kept and any tax-related problems can be avoided. If you are investing in bonds or debentures or buying gold worth more than ₹ 2 lakh, you will also have to provide a PAN card.
Account of every property
If you are buying property worth ₹ 10 lakh or more, you will have to provide a PAN card. This rule applies not only to houses but also to shops and commercial properties. At the same time, if you are selling a property, it is also necessary to provide a PAN card so that the government can track how much money you have earned and whether tax has been paid on it or not. The bank also asks for a PAN card to take a home loan, so that it can understand your financial position.
Even if you are paying rent of more than ₹ 1 lakh annually to someone, both the landlord and the tenant are required to give their PAN card to each other.
Why is a PAN card important
Many times people think that they do not need a PAN card, but if you are doing any big financial transaction, then it is your most important identity. It not only makes the tax-related processes easy but also helps you in every small and big decision related to banking, investment and property.
So, if you do not have a PAN card yet, then get it made as soon as possible because without it many important works can get stuck. A PAN card is the key to your financial life.
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