Answer By law4u team
A PAN card (Permanent Account Number card) is a unique, 10-character alphanumeric identification issued by the Income Tax Department of India to individuals and entities. It serves as an essential identity proof for financial and tax-related transactions. What is a PAN Card? Unique Identifier: The PAN is a permanent, lifetime identification number that does not change even if you move or change jobs. Issued by: The Income Tax Department under the Central Board of Direct Taxes (CBDT). Format: It consists of 10 characters — five alphabets, four numerals, and one alphabet at the end (e.g., ABCDE1234F). Card Content: The card contains the PAN number, the cardholder’s name, photograph, date of birth (or incorporation in case of companies), and signature. Why is PAN Card Required for Tax? 1. Tracking of Financial Transactions: PAN links all your financial transactions, such as salary, bank deposits, investments, property purchases, and tax payments, under one unique number, helping the tax authorities monitor and track income and taxes paid. 2. Mandatory for Filing Income Tax Returns: PAN is compulsory for filing income tax returns (ITR) in India. Without PAN, individuals and entities cannot legally file returns. 3. Identification of Taxpayers: It helps avoid duplication or fraud by providing a unique identity for every taxpayer. 4. TDS (Tax Deducted at Source) and TCS (Tax Collected at Source): Entities deducting or collecting tax at source require PAN details to properly credit tax deducted/collected against the taxpayer’s account. 5. Financial Transactions: PAN is required for transactions exceeding specified limits, such as: Opening a bank account Buying or selling property Investing in mutual funds or stocks Applying for loans above a certain threshold 6. Preventing Tax Evasion: By linking various transactions to a single PAN, the government can track undeclared income or suspicious financial activities. Summary The PAN card is a unique identification number issued by the Indian Income Tax Department that is essential for filing taxes, conducting financial transactions, and ensuring tax compliance. It helps the government track income and prevent tax evasion effectively.
