PAN Card for Income Tax - Top Reasons

A person who does not have a PAN but holds an Aadhaar number can quote the Aadhaar number in the return of income instead, and a PAN is then allotted to that person.

2. PAN Card to File Income Tax Refund

Individuals and entities who are eligible for Income tax refunds after the payment of their taxes will have to quote their PAN Card number in their application form. The PAN has to be quoted as the government uses it as the only means of identification in taxation related activities. Failure to quote the PAN in such an application will result in the application not being processed and the individual/entity will not receive the refund.

A PAN that is not linked with Aadhaar becomes inoperative, in which case the refund is not issued and no interest is paid on it for that period until the PAN is reactivated by intimating the Aadhaar number to the Income Tax Department. 

3. PAN Number to Check Income Tax Refund Status

After filing the Income Tax refund application, taxpayers can check the status of their refund on the government portal. This status can be checked only upon entering the PAN Card number of the individual/entity.

4. PAN for Filing TDS Certificates

TDS (Tax Deducted at Source) is a tax collection method implemented by the government of India by which the tax amount is deducted at the time of disbursing the amount to the individual. Companies, traders or any entities that deduct TDS are required to furnish a TDS certificate stating the amount of tax that has been deducted. The TDS certificate has to also contain the PAN number of the payee in all documents such as TDS Returns , statement of perquisites and profits in lieu of salary.

5. PAN Number to Log in to the Income Tax Website

Taxpayers who wish to log in to the Income Tax website for the purpose of e-filing their returns are required to enter their PAN numbers. As the Income tax Department is moving towards a paperless income tax return filing system, taxpayers will have to file their returns through the website, where registration requires their PAN numbers.

6. PAN Card to Avoid Being Overtaxed

Individuals who submit their PAN Card details at the time of filing their returns will avoid being over taxed, as the government will have a history of their transactions and accordingly calculate tax after considering deductions. For individuals and entities who do not quote their PAN numbers, however, tax is deducted at source at the higher of the rate specified in the relevant provision, the rate in force or 20%. Thus, having a PAN Card will help the individual avoid paying more than he/she is required to.

Also Check -  Why do you Need PAN Card For Tax 

PAN Card for Income Tax Requirements: Submitting Returns and Preventing Penalties

Every Indian taxpayer must have a Permanent Account Number (PAN) card. It functions as a distinct identifying number for people and organizations and is issued by the Income Tax Department. Let's examine how the PAN card is used for tax-related chores, how it helps with tax return filing, and the consequences of non-compliance. 

Income Tax Return Filing Using a PAN Card

Taxpayers are required to file income tax forms each year. Here's how to use a PAN card to file your returns step-by-step: 

• Collect Documents: Compile any required documentation, such as your PAN card, Form 16 (for salaried individuals), bank statements, evidence of investments, and information about additional sources of income
• Register on the Income Tax site: Use your PAN to register on the Income Tax Department's e-filing site. Your user ID is the PAN
• Select the Appropriate Form: Depending on your sources of income, choose the relevant ITR form. For instance, ITR-4 is for resident individuals, Hindu Undivided Families and firms (other than LLPs) with presumptive business or professional income and total income up to Rs.50 lakh, whereas ITR-1 is for salaried personnel
• Complete the Information: Accurately enter your personal information, income information, and tax deductions. Make sure the details match those on your PAN card and other papers
• Go for Tax Calculation: The portal assists you in determining your tax obligation. You are eligible for a refund if you have overpaid taxes. You must pay the remaining amount if there is a shortage
• Check and Submit: Check the information and send it in return. You can transmit a signed hard copy of the acknowledgement to the Centralized Processing Center (CPC) or use Aadhaar OTP or net banking to verify it online.

Verify the return within 30 days of filing, either online or by sending the signed ITR-V to the Centralized Processing Centre, Bengaluru, as a return that is not verified within this period is treated as invalid.

What Happens if You Have Multiple PAN Cards?

As per the rules, having multiple PAN Cards in your name is an offence. A penalty of Rs.10,000 will be levied under Section 467 of the Income-tax Act, 2025, if found to have multiple PAN.

In case, you have more than one PAN it is better to surrender it immediately.

• Bank statements/passbook for interest on savings account.
• Interest income statement for fixed deposits.
• TDS certificate.
• Form 26AS
• Section 80C investment documents.
• Contribution to Provident Fund
• Children's school tuition fees
• Life insurance premium payment
• Stamp duty and registration charges
• Principal repayment on your home loan
• Equity linked savings scheme
• Mutual funds investment

How to Avoid Penalties

Serious fines may follow noncompliance with income tax laws. The following are typical dangers and strategies for avoiding them: 

• Inaccurate Information: You may be penalized for entering inaccurate information on your ITR. Make sure to double-check all your entries, particularly the tax deductions, income information, and PAN Card number 
• Tax Evasion: Giving incorrect information or purposefully hiding income can result in severe fines and perhaps legal action. 50% of the tax payable on under-reported income, or 200% where the income is misreported may be the penalty 
• Non-Filing of Returns: You could be charged a late filing fee of Rs.5,000 if your total income exceeds Rs.5 lakh and you do not file your return by the due date, or up to Rs.1,000 if your total income is Rs.5 lakh or less
• Failure to Pay Tax: Interest will be charged on the amount of tax that is not paid in full. Over time, this may greatly raise your tax obligation. 

Benefits of Having a PAN Card

There are many advantages to having a PAN card, particularly in terms of financial activities. Here are a few main benefits: 

• Simplified Tax Filing: Filing income tax returns is made easier with a PAN Card. It acts as a guide for all your financial dealings 

• Avoiding Tax Deduction at Higher Rates: Taxes are deducted at a higher rate in the absence of a PAN. Giving your PAN guarantees that the regular rate of tax deduction is applied 

• Simple Loan Approvals: Because a PAN Card offers a trustworthy financial background, it facilitates loan approvals 

• Investment Tracking: It makes sure you pay the right amount of tax on gains and aids in keeping track of your assets 

• Additional Proof of Birth for Minors: Individuals can apply for their children's Minor PAN cards. It allows minors to be nominees for shares, properties, or financial assets in addition to serving as the child's identity card. 

Summary

A PAN card for income tax is needed to file returns, claim and track refunds, log in to the e-filing portal, receive TDS credit and avoid higher tax deduction. Holding only one PAN, linking it with Aadhaar and reporting income accurately help you avoid penalties. Quote your PAN correctly every time to keep your income tax filings smooth.