WHAT IS A PAN ?
The full form of PAN is Permanent Account Number which is an identification number issued under section 139A of the Income Tax Act 1961.
WHO MUST HAVE A PAN ?
According to section 139A of the Income Tax Act mentioned above, the following person must have a PAN:
1. If the total income of the person takes her/him tax assessment.
2. If the person is carrying a business of turnover or gross receipts is or likely to be more than Rs. 5 lakh.
3. If the person is required to furnish a return of income under sub-section (4A) of section 139. This is related to trust or similar legal entity for religious purposes.
4. If the person is an employer who is required to submit returns of fringe benefits under section 115WD of the act.
5. A resident other than an individual who enters a financial transaction of amount aggregating to Rs. 2.5 lakhs.
6. A person who is either acting as the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer of the person mentioned above (no.5) or who is competent to represent the person mentioned above (no.5).
HOW TO APPLY FOR A PAN ?
Form 49A is used for application of PAN. One can also make an online application (link provided below). Proof of Identity and Proof of Address is required to make PAN application.
WHICH TRANSACTIONS MANDATORILY REQUIRE PAN?
Income Tax Rule no. 114B lists all the transactions which require a PAN.
1. Sale or purchase of motor vehicles apart from two-wheelers.
2. Opening an account (other than a time-deposit or basic savings account) with a banking company or a cooperative bank.
3. Application for a debit or credit card from a banking company or a cooperative bank.
4. Opening a demat account.
5. Payment to a hotel or restaurant against a bill of more than Rs. 50,000.
6. Payment for travel to a foreign country or purchase of foreign currency for more than Rs. 50,000.
7. Payment for purchase of Mutual Fund units for more than Rs. 50,000.
8. Buying debentures or bonds for more than Rs. 50,000.
9. Payment to RBI to purchase bonds issued by it for more than Rs. 50,000.
10. Deposit with banking company, cooperative bank or post-office of amount more than Rs. 50,000 in one day.
11. Purchase of bank drafts or pay orders or banker's cheques from a banking company or a co-operative bank for more than Rs. 50,000 at one day.
12. Time deposit of Rs. 50,000 at one time or more than Rs. 5 lakhs in a financial year with banking company, co-operative bank or a Nidhi Company.
13. Payment for pre-paid instruments of more than Rs. 50,000 in a financial year.
14. Payment of life-insurance premium of more than Rs. 50,000 in a financial year.
15. Transactions for sale or purchase of securities of listed companies of more than Rs. 1 lakh.
16. Transactions for sale or purchase of securities of un-listed companies of more than Rs. 1 lakh.
17. Sale or purchase of immovable properties of more than Rs. 10 lakhs.
18. Sale or purchase of any other goods and services not listed above of value more than Rs. 2 lakh.