Importance of PAN ? Permanent Account Number
PAN or Permanent Account Number is a 10 digit code issued by the Income Tax department to every assessee. For specified transactions every person has to quote his or her permanent account number ( PAN ) compulsorily according to a new rule 114. Under new series Permanent Account Number or PAN is an all India unique number of 10 digits which remains unchanged even in case of change of your address, station or your assessing officer.
To widen the tax net the requirements to obtain and quote PAN has been amplified. For filing Income Tax returns 1/6 scheme has been abolished from 1st April 2006. Only those persons are required to file Income Tax returns whose income exceeds the maximum limit of taxable income.
Why PAN (Permanent Account Number) is Necessary.
Every person earning total amount more than taxable limit should obtain a PAN.
A person should obtain a PAN if he is liable to file a return of income under section 139 (4A).
By employer, who is required to file a return of fringe benefits u/s 115WD.
A businessman or a professional should obtain a PAN, if his total sales/turnover or gross receipts are more than Rs.5 lakhs.
According to rule for the following transactions every person has to quote his PAN in all the documents:
When any immovable property valued Rs.5 lakhs or more is sold or purchased.
For the registration of a motor vehicle if required, during sale or purchase on demand of registration officer.
To open a bank account.
To apply for telephone/cellular phone connection.
To pay the bills of hotel and restaurants amounting more than Rs.25, 000 at a time.
For time Deposit account with banks or post offices more than Rs.50, 000.
To pay in cash for foreign travel amounting Rs.25, 000 or more at a time.
A deposit more than Rs.50, 000 in one day in any bank.
To purchase bank drafts, pay orders/bankers cheque on cash payment of more than Rs.50, 000/- in one day.
For sale or purchase of securities on contract valued more than Rs.1 lakh according to section 2(h) of Securities Contracts (Regulating) Act, 1956.
On declaration under Form No. 60/61 any one can open a bank account or make any deposits in the bank or enter into other above mentioned transactions without having a PAN.
Quoting a wrong PAN (Permanent Account Number) will bring you a penalty of Rs. 10,000/- u/s 272B (2)