CA Kapil M Gupta

Kapil Gupta

PAN card Importance and Scams (Permanent Account Number) – Care About Your Identification:

Friends’, “PAN card” is something which becomes one of the key document to reveal individual identity. Let us first understand that how PAN card is important for card holder to safe guard public

money from many cheaters in the society.The importance of PAN card has grown over the years, and it is today an essential part of our lives. The most vital purpose of allotting PAN to an entity is for the purpose of identification and to track all the related monetary information of that entity. Earlier the significance of PAN was merely for filing income tax returns.

panThe primary objective of PAN is to use a universal identification key to track financial transactions that might have a taxable component to prevent tax evasion. The PAN number remains unaffected by change of address throughout India.

Who must apply for PAN?

  • Anybody who earns a taxable income in India, including foreign nationals who pay taxes here
  • Anybody who runs a business (be it retail, services or consultancy) that had total sales, turnover or gross receipt exceeding Rs 5 lakh in the previous financial year

Over the period of time, PAN is used in dealings with the stock markets, banks account opening and purchase of real estate, vehicles, loans. Today, PAN has started finding use in unconventional areas which are as follows: –

Sr. No. Nature of Transaction Mandatory Quoting of PAN
1. Immovable property i.  Sale/ purchase exceeding Rs.10 lakhs;

ii.   Properties valued by Stamp Valuation authority at amount exceeding Rs.10 lakhs will also need PAN.

2 Motor vehicle (other than two wheeler) All sales/purchases
3. Time deposit i. Deposits with Co-op banks, Post Office, Nidhi, NBFC companies will also need PAN;

ii. Deposits Amount exceeding fifty thousand rupees or aggregating to more than five lakh rupees during a financial year will also need PAN

4. Sale or purchase of securities Contract for sale/purchase of a value exceeding Rs.1 lakh
5. Hotel/restaurant bill(s) Cash payment exceeding Rs. 50,000/-
6. Cash purchase of bank drafts/ pay orders/ banker’s cheques Exceeding Rs. 50,000/- on any one day
7. Cash deposit with banking company Cash deposit exceeding Rs. 50,000/- in a day
8. Foreign travel Cash payment in connection with foreign travel or purchase of foreign currency of an amount exceeding Rs. 50,000/- at any one time (including fare, payment to travel agent)
9. Credit card Application to banking company/ any other company/institution for credit card

Co-operative banks also to comply.

10. Mutual fund units Payment exceeding Rs. 50,000/- for purchase
11. Shares of company i. Opening a demat account;

ii.Purchase or sale of shares of an unlisted company for an amount exceeding Rs.1 lakh per transaction.

12. Debentures/ bonds Payment exceeding Rs. 50,000/-
13. RBI bonds Payment exceeding Rs. 50,000/-
14. Life insurance premium Payment exceeding Rs. 50,000/- in a year
15. Purchases or sales of goods or services (including jewellery/bullion) Purchase/ sale of any goods or services exceeding Rs.2 lakhs per transaction
16. Cash cards/ prepaid instruments issued under Payment & Settlement Act Cash payment aggregating to more than Rs. 50,000 in a year

The significance of PAN cannot be questioned as this has become the primary document sought in all important legitimate dealings. It is seen that quoting or producing a copy of your PAN card is compulsory in practically every money transaction, and the same is not restricted to Income Tax dealings.

Do NRIs require PAN Card?

As PAN is required for any financial transaction in India, an NRI will need to have a PAN card if he has an income earned in India and need to file returns, if he wishes to invest in India. He/shecarries out banking transactions, if he purchases real estate or for any of transaction mentioned above.

Beware of PAN FRAUDS:

The increasing importance of PAN has increased the likeliness of PAN Card identity theft. The safeguarding of the physical copy of the PAN card no longer assures that your card is not being misused. As a majority of transactions demand a photocopy of your PAN card, or simply quoting the Permanent Account Number, it is very easy for your information to be misused for high ticket purchases or benami property transactions. A copy of your PAN card or simply its number can be quoted in transactions, which you are not even a part of.

Example of how your information can be misused:

1. Booking railway Tatkal tickets: Recently, a Consumer activist group revealed that the PAN card copy used in Railway ticket Tatkal bookings were misused by several jewellers. When an individual produces his PAN to book the Tatkal tickets, this information is fed in the Indian Railways system and also displayed on the ticket, reservation chart and train coaches. Unscrupulous jewellers steal this information from such public displays and use it to furnish tax collected details while they sell jewellery of very high value to high-net worth individuals who do not wish to produce their PAN. Hence it is advisable not to furnish PAN details while booking Tatkal tickets.

2. Applying for credit card:A PAN copy was being handed over by one of the individual to bank representative for applying new Credit card. This PAN was being misused at some other place and was sent to other states. As per the address mentioned in PAN records, a notice for non-payment of loan installment was being received by an individual from Bank which was fraudulently done by representative.

If this happens to you?

When your PAN card is illegally used, you may not even be aware of this for atleast 6 months after the wrong transaction. You can check for such benami transactions by going through your Form 26AS, which is a consolidated statement of tax deducted, along with other details. If you are a non-tax paying PAN card holder, you may not even be able to check this form. The Income Tax department will require the PAN card holder to prove that the transaction was not carried out by him, and also give details on his source of funds. This becomes very difficult and time-consuming. As a PAN card holder, you should take care while disclosing your PAN details to anyone. You must hand over only signed photocopies and try to reduce using PAN in all casual transactions as ID proof.

Conclusion:

Thus the PAN is a key document today and one should be superfluous careful while furnishing or mentioning the same.

Disclaimer: The contents of this article are for information purposes only and does not constitute advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

(Republished with Amendments by Team Taxguru)

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6 Comments

  1. Abhishek says:

    This is to inform you Mr. Kapil M Gupta that long ago railway stop displaying full PAN on reservation chart and now requirement of giving any proof for tatkal reservation is also done away.

  2. sudhin bathija says:

    More over anyone having a little knowledge of his/her pan can randomly throw outsome numbers and quote an unknown persons pan also then?????

  3. sudhin bathija says:

    PAN xerox is given at the time of opening new accounts online/xerox copy then what control does the original person have?

    1. kapil gupta says:

      Dear Sidhes,
      I appreciate your feedback, just to avoid any misuse it is not recommended to furnish PAN details while Tatkal ticket booking. Just for your info. there were fraud in past wherein PAN database purchased and misused by group of people.

      Regards,
      CA Kapil Gupta

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