A PAN card is a 10 digit unique number that is assigned to every tax paying individual and entity in India. The PAN card was designed solely for the purpose of helping the government identify taxpayers and ensuring these entities paid the taxes due as per the tax slabs they fall under.
While many think a PAN card is only required at the time of filing your Income tax returns, which is usually once a year, there are a number of uses that the PAN card fulfils relating to income tax.
Reasons Why PAN Card is Essential for Income Tax
6 reasons why a PAN card is essential when it comes to tax are listed below.
PAN Card for Filing Income Tax Returns
A PAN card is a necessity to file your Income Tax returns, since the government uses the PAN card to identify an individual or entity from a taxation point of view. The PAN card number has to be quoted when filing Income Tax returns by individuals and entities, failing which the individual or entity’s Income Tax returns will not be acknowledged and the government will assume the said individual has not paid his/her taxes.
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.
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.
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.
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.
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, the government will levy a flat 30% tax irrespective of the tax slab the individual or entity comes under. Thus, having a PAN card will help the individual avoid paying more than he/she is required to.
News About PAN Card for Income Tax
Many PAN Cards Procured Prior to GST Found to be Fake
Investigations carried out before the implementation of the Goods and Service Tax (GST) have revealed faults with over one lakh PAN cards in the region. Commissioner of Commercial Taxes Mr. Mukesh Kumar Meshram has instructed all Zonal and allied officials to authenticate every PAN card issued.
It is mandatory for traders to register themselves with the Commerce Department before they can open businesses in the region, a process which requires the use of PAN cards which either belongs to them or their partner. It has been found that PAN cards are often misused by traders for illegitimate tax gains.
The Central Government has directed all States to implement GST, a move which is expected to bring all types of businesses under its purview. The Commerce Department is ensuring all businesses are registered with it before that happens. According to a statement released by the Commissioner of Commercial Taxes, 1,01,227 PAN cards have been found to be faulty or fraudulent.
26th July 2016
Tax Defaulters PAN Information to be blocked
The government is mulling blocking the PAN card details of tax defaulters in an effort to curb tax evasion. Tax evaders and defaulters will no longer be able to receive government subsidies such as LPG subsidy.
This move has been made to arrest the flow of black money from the country to safe havens. According to reports, only 3% of the population pay their taxes.
As per this initiative, the Income Tax department would receive a notification from the Credit Information Bureau once a tax defaulter uses his PAN card for any service. Authorities would also share the list of flagged individuals with offices that register property so as to prevent defaulters from purchasing immovable property.
From 2016, PAN details have to be quoted for a wide number of transactions, from jewellery purchases above Rs. 2 lakh to cash transactions above Rs. 50,000. Purchase of immovable property above Rs. 10 lakh would also require PAN details.
21st June 2016