PAN card is a fundamental ID document for individuals and companies. It helps different entities to verify their identities. At the same time, the PAN card helps the government bodies to track and analyze the taxpayers. A PAN card comes with numerous benefits, so if you are not having one, it's time to get one.

What is a PAN Card?

PAN, or Permanent Account Number, first came into the limelight in 1972 as an alternative to General Index Register or GIR number. From that time onwards, PAN became statutory under section 139A of the Income Tax Act 1961. The sole purpose of PAN was to identify eligible taxpayers automatically through a unique number. It had replaced the old manual system.

Holding a PAN card became mandatory in 1976 for taxpayers to facilitate financial transactions and prevent tax evasion. Right now, a PAN card simplifies the KYC process as well.

Benefits of a PAN Card

For an individual and a company, a PAN card is equally important – the benefits of PAN cards include the following:

1. Helps in Bank Account Creation

A bank account is essential today, and when a person reaches a bank to open the account, it becomes mandatory to submit a few documents that depict the identity. Here, one needs to present a PAN card copy along with all other ID documents.

After opening a bank account, one is automatically eligible for a debit card cum ATM card; however, for credit cards and additional cards, one needs to fill up a form and submit ID proof. A PAN card is essential here as well.

Along with that, PAN cards are mandatory documents for DEMAT accounts. Therefore, holding a PAN card will make the entire trading process seamless for the individuals.

2. Makes Business Registration Easier

In case, you are an aspiring entrepreneur and dreaming of opening your company in the coming days, you need a PAN card. First, you need your personal PAN card, and later, you will need to have a business PAN card as well.

3. Makes Loan Application Stronger

Another benefit of a PAN card is it helps in the loan application as well. Therefore, if you need money for your business or personal usage, you must give a copy of your PAN card with the application. It prevents the chances of rejection of the application.

4. Assists In Direct Tax Paying And Tax Return Filing

Whether direct tax paying or tax return filing – a PAN card is mandatory in all cases. The fact is all types of tax-related documentation are quoted with the PAN. So, if you are under any tax slabs, you must get your PAN card.

5. Eases High-value Transactions

Any high-value transaction (sometimes above 25,000) requires a PAN card. In case, you do not have a PAN card, you will not be able to conduct those high-value transfers. Here are some instances where a PAN card is essential:

• Sell/purchase of immovable property valued at Rs. 5 lacs or up
• Sell/purchase of a vehicle other than two wheeler
• One-time payment in hotels/restaurants exceeding Rs. 25,000 rupees
• Cash payments of Rs. 25,000 or up during travel in foreign countries
• Payments to RBI or any other companies amounting Rs. 50,000 and more for bonds/debentures/shares
• One-time deposits in banks amounting Rs. 50,000 and up
• Payments for mutual funds
• Payments of bullion or jewelry of 5 lacs or up

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6. Prevents Tax Deductions

If you are facing a higher rate of tax deductions, then be assured that your PAN card must be missing. The Government of India can charge 30% or more for the invoiced payments unless you have a PAN.

Therefore, to avoid this kind of tax deduction, get your PAN card done as soon as possible and submit it during tax payments.

7. Helps In Effortless Payments With Invoices

It is known to all that transactions with invoices are taxable, which is why several merchants prefer transactions without invoices. However, to maintain transparency, invoices are a must, and even after providing invoices, merchants can avoid the higher tax deductions for any payments, returns, and remittances with a PAN card. It is one of the biggest benefits of a PAN card.

8. Eases Foreign Transactions

At the time of currency exchange for whatever reason (tour/stay/study), a PAN card is mandatory. Also, it is essential to carry a PAN card along with other ID proofs in any foreign country to avoid further problems.

Some more cases where a PAN Card is Required

The benefits of PAN cards for individuals are mentioned above. Now, let’s have a look at the benefits the government authorities get due to the PAN cards:

• Monetary transactions tracking
• Tax revenue prediction

PAN was introduced to identify the individuals who have to pay the tax. So, the government has a greater purpose with the PAN card.

Conclusion

No matter whether you are an individual or you are a business owner, each entity is eligible to pay a certain amount as a tax to the government. Therefore, an individual has to get one, and so does the business entity. Business PAN cards depict the business identity. On the other side, the PAN of a business tells the government about the company's earnings, based on which the payable tax will be calculated.

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