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Tuesday, May 27, 2008

PAN Card - Frequently Asked Questions

1. What is PAN?
Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by an Assessing Officer of the Income Tax (I-T) Department. A typical PAN would be, for e.g., ABCDE1234F.

2. Why is it necessary to have PAN?
It is necessary to have PAN because as per the rules of I-T Department, it is mandatory to quote PAN on all correspondence with any income tax authority. It is good to mention here that since 1 January 2005, it has become mandatory to quote PAN on challans for any payment due to the I-T Department. Also, as stated above, it is now compulsory to quote PAN in all documents pertaining to financial transactions notified from time to time by the Central Board of Direct Taxes (CBDT). Some of these financial transactions include sale and purchase of immovable property or motor vehicle, or paying the hotels and restaurants in cash whose amount exceeds a certain limit, or in connection with travel to any foreign country. In fact PAN has to be mentioned for obtaining a telephone or cellular telephone connection! Likewise, PAN has to be quoted for making a time deposit exceeding Rs.50, 000/- with a Bank or Post Office or for depositing cash of Rs.50, 000/- or more in a Bank.

3. How does Income Tax Department ensure that PAN is quoted on transactions mentioned above?
It is the responsibility of anyone and everyone entering into any kind of financial and/or economic transactions as notified by the CBDT, to quote PAN in the related documents.

4. Is it compulsory to quote PAN on return of income?
Yes, it is compulsory to quote PAN on return of income.

5. How will these authorities verify PAN?
The authorities verify PAN from the I-T Department’s website with the help of the facility provided.

6. Who must have a PAN?
According to the I-T Department, it is compulsory for the following people to have PAN:
  • All taxpayers (including those who furnish return of income on behalf of others) must obtain PAN.
  • Any person, who intends to enter into financial transaction such that its document requires quoting PAN, must also obtain PAN.
    The Assessing Officer may allot PAN to any person either on his own or on a specific request from such person.

7. Can a person obtain or use more than one PAN?
There have been cases where a person ahs been using two PAN for different financial transactions, but it must be kept in mind that obtaining or possessing more than one PAN is against the law.

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