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Explained: Why PAN card is important for filing income tax? In which financial transactions PAN is mandatory?
A Permanent Account Number has been made compulsory for every transaction with the Income-tax Department.
PAN card stands for Permanent Account Number. PAN card is a 10-digit unique alphanumeric number issued by the Income Tax Department. PAN is issued in the form of a laminated plastic card (commonly known as PAN card).
PAN card enables the department to link all transactions of the assessee with the department. These transactions include tax payments, TDS/TCS credits, returns of income, specified transactions, correspondence, and so on. It facilitates easy retrieval of information of assessee and matching of various investments, borrowings and other business activities of assessee.
A Permanent Account Number has been made compulsory for every transaction with the Income-tax Department. It is also mandatory for numerous other financial transactions such as the opening of bank accounts, in the bank account, deposit of cash in a bank account, the opening of Demat account, transaction of immovable properties, dealing in securities, etc. A PAN card is a valuable means of photo identification accepted by all Government and non-Government institutions in the country.
Specified financial transactions in which quoting of PAN is mandatory
Sale or purchase of a motor vehicle or vehicle other than two-wheeled vehicles.
Opening an account (other than a time-deposit and a basic savings bank deposit account) with a banking company or a cooperative bank
Making an application for the issue of a credit or debit card.
Opening of a Demat account with a depository, participant, custodian of securities, or any other person with SEBI
Payment in cash of an amount exceeding Rs 50,000 to a hotel or restaurant against a bill at any one time.
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Payment in cash of an amount exceeding Rs 50,000 in connection with travel to any foreign country or payment for the purchase of any foreign currency at any one time.
Payment of an amount exceeding Rs 50,000 to a Mutual Fund for purchase of its units
Payment of an amount exceeding Rs 50,000 to a company or an institution for acquiring debentures or bonds issued by it.
Payment of an amount exceeding Rs 50,000 to the Reserve Bank of India for acquiring bonds issued by it.
Deposit with a banking company or a co-operative bank; Cash exceeding Rs 50,000 during any one day
Payment in cash for an amount exceeding Rs 50,000 during any one day for the purchase of bank drafts or pay orders or banker's cheques from a banking company or a co-operative bank.
A time deposit of amount exceeding Rs 50,000 or aggregating to more than Rs 5 lakh during a financial year with a banking company, co-operative bank, Post Office, Nidhi referred to in Section 406 of the Companies Act, 2013, or a non-banking financial company.
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