Permanent Account Number (PAN) is a code that acts as identification of Indians, especially those who pay Income Tax. It is a unique, 10-character alpha-numeric identity allotted to each taxpayer, by the Income Tax Department in India. It serves as an important identification proof of individual.
The primary purpose of the PAN is to bring a universal identification to all financial transactions such as receiving taxable salary or professional fees, sale or purchase of assets above specified limits, and more and to prevent tax evasion by keeping track of monetary transactions.
- For payment of direct taxes
- To file income tax returns
- To avoid deduction of tax at higher rate than due
- To enter into specific transaction such as:
(a) Sale or purchase of immovable property valued at Rs 5 lakh or more
(b) Sale or purchase of a vehicle other than a two wheeler
(c) Payment to hotels or restaurants an amount exceeding Rs 25,000 at any one time
(d) Payment in cash an amount exceeding Rs 25,000 in connection with travel to any foreign country
(e) Payment of an amount of Rs 50,000 or more to the Reserve Bank of India for acquiring bonds
(f) Payment of an amount of Rs 50,000 or more to a company or an institution for acquiring bonds or debentures
(g) Payment of an amount of Rs 50,000 or more to a company for acquiring shares
(h) Any mutual fund purchase
(j) Deposit exceeding Rs 50,000 with any single banking institution in 24 hours.
(k) Payment exceeding Rs 5 lakh for purchase of bullion and jewellery