The PAN card is one of the most significant documents in India. Along with being a unique number, it is used in various financial and legal activities.
A PAN Card is required to open a bank account, file your taxes, or do anything else that involves money. This blog will explain what is PAN card, why is it important, and how to apply for one.
What is a PAN Card?
A PAN card is short for "Permanent Account Number,". It is a ten-digit number given by India's Income Tax Department. It must be used for all legal finance-related activities.
Additionally, it is a required tool for all transactions and payments and a way to prove your identity when filing taxes. The PAN card format contains important details such as the person's name, date of birth, picture, and, of course, the PAN card number.
Importance of PAN Card
Possessing the PAN Card is more advantageous as it offers several benefits. Let us look at the factors for its importance:
1. Makes financial transactions easier
Getting a PAN card can help people make financial transactions easily because it is compatible with all of them. In addition to acting as identification documentation and simplifying organisation in these processes, a PAN Card can be used to open a bank account, apply for a loan, and even purchase property or other assets.
2. A consistent promise to pay income tax
The PAN card's primary use is for tax compliance income. For those who generate any income that may be deemed taxable, the PAN Card is the only method of payment that is accepted for taxes. The 10-digit PAN Card number corresponds with filing tax returns, obtaining refunds, and meeting all other income tax requirements.
3. Stops tax evasion
The PAN card is a necessary measure designed with the primary goal of preventing tax evasion. The technology should enable the government to monitor and associate individual transactions with a unique identification number.
Thus, it can help to ensure an open and equitable taxation system by supporting the tracking and monitoring of individual financial actions.
PAN Card number combination
The PAN card number is a precisely calibrated alphanumeric code where the various components provide distinct information and meaning. It acts as a record of your financial encounters.
The first five characters are the letters for the numerical sequence, ranging from AAA to ZZZ. The last character is the first letter of the owner's last name, and the fourth character is a code that indicates the class of ownership, such as (P) for individuals or (C) for a company.
The following four characters are cyphers that combine to create a progressive number sequence ranging from 0001 to 9999.
Final Character: To confirm that PAN is unique, there is one more check digit, an alphabetical character that has been specifically assigned.
Information Encoded: By confirming the owner's identification and providing a means of monitoring their financial activity, this combination improves the financial administration system's operational efficiency.
Read More: How To Save Money For Kids
Types of PAN Cards
A) Personal PAN Card: This is for people in charge of their finances.
- They are customised for each person.
- They are used to doing various things, like filing tax reports, opening savings accounts, and managing investments in the personal markets.
- Especially important for big purchases, like homes, cars, etc.
B) Company PAN Card: This is used to track the taxes and money of a business. It can be used by Indian businesses.
- It is for companies set up under the Indian Companies Act.
- It can be used for all cash transfers, tax payments, and filings for a business.
- It is required for all financial activities, like opening a bank account for your business or asking for a loan.
C) Business PAN Card: Everyone can use this card, which helps them keep track of their money, like partnerships, investment trusts, and non-governmental groups.
- It's easier to do some financial things with it, like getting a bank, tax, and government services.
- Businesses must follow the rules set by the government to stay open.
Process to apply for a PAN card
Obtaining a PAN card is a very simple process. People can follow one of two things: the traditional steps or the easier digital way.
Apply offline for a PAN Card
- Visit the PAN application centre.
- For Indian nationals, complete Form 49A; for foreigners, complete Form 49AA.
- Send it in with the other required documentation.
Apply online for a PAN Card
- Visit the PAN application's official website.
- Fill out the online application.
- Upload the required files.
- Make an online payment for the cost.
- Follow the progress of your online application.
Steps to download your PAN Card online
Here’s the process to download your PAN Card online:
- Go to the e-PAN portal.
- Enter your PAN, Aadhaar, acknowledgement number, and DOB to ensure you secure access.
- As soon as your verification has been done, you can easily download your e-PAN and use it right away.
This process is similar if you want to download a company PAN card.
Also Read: Importance of Tax Planning - Plan your Taxes, Grow your Wealth
Conclusion
A PAN Card is a crucial document in India used as a unique ID number for business and law purposes. People are made to pay their income taxes, which is good for the business and prevents people from not paying taxes.
You can easily obtain a PAN card, and the operation can be carried out online. Simply follow the steps given above to get your PAN card quickly. Make sure you provide the correct information, and once you've sent in your application, keep an eye on its progress.
Get your PAN card right now, and use it to open a Kotak 811 savings account today.
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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