What is PAN and why is it important for an income tax returns filler?
What is PAN? Permanent Account Number (PAN) is a 10-digit alphanumeric number, issued by the Income Tax Department. PAN enables the Income-Tax Department to link all transactions of a person with the department. These transactions include tax payments, TDS/TCS credits, returns of income, wealth, gift, FBT, specified transactions, correspondence, and so on. PAN, thus, acts as an identifier for a person with the tax department.
1. PAN was introduced to facilitate linking of various documents, including payment of taxes, tax assessment, tax demand, tax arrears, etc.of a person. It is not possible to file income tax returns (ITR) if PAN number is not provided. (Image source: Twitter)
2. PAN also helps the Income Tax Department detecting tax evasion and widening of tax base. (Image source: PTI)
3. It is mandatory to quote PAN on return of income and all correspondence with any income tax authority. (Image source: PTI)
4. PAN is mandatory for sale or purchase of any immovable property valued at five lakh rupees or more.
5. PAN is important as it is required for sale or purchase of a motor vehicle or vehicle, one-time deposit of over Rs 50,000 with a bank, deposit over Rs 50,000 with Post Office Savings Bank, a contract of over 1 lakh rupees for sale or purchase of securities, among many other purposes. These are likely to be rejected if a PAN number is not provided.