Is Having A PAN Card Compulsory? Why Should You Obtain Pan Mandatorily?

A Permanent Account Number (PAN) is a 10-digit alphanumeric number, issued by the Income Tax Department, to an Indian citizen. PAN enables the department to link all transactions including tax payments, TDS/TCS credits, returns of income/wealth/gift/FBT, etc., of the citizen with the department. Hence, PAN acts as an identifier for the citizen with the tax department.

Why is it mandatory to have PAN?

It is mandatory to quote PAN on return of income, and all correspondence with any income tax authority.

Additionally, it is also compulsory to quote PAN for financial transactions like, the sale or purchase of any immovable property valued at Rs. 5 lakh or more, the sale or purchase of a motor vehicle or vehicle, any time deposit - exceeding Rs. 50,000, with a bank or Post Office, any contract of a value exceeding Rs. 1 lakh for sale or purchase of securities, opening a bank account, making an application for installation of a telephone connection, payment to hotels and restaurants against their bills for an amount exceeding Rs. 25,000 at any one time, payment in cash for the purchase of bank drafts or pay orders or banker's cheques for an amount aggregating Rs. 50,000 or more during any one day, deposit in cash aggregating Rs. 50,000 or more with a bank during any one day, payment in cash in connection with travel to any foreign country of an amount exceeding Rs. 25,000 at any one time.

For whom PAN is mandatory

According to the Income Tax department, PAN is mandatory for every person if his/her total income or the total income of any other person in respect of which he/she is assessable during the previous year exceeds the maximum amount which is not chargeable to tax, a charitable trust which is required to furnish return under Section 139(4A), every person who is carrying on any business or profession whose total sale, turnover, or gross receipts are or is likely to exceed five lakh rupees in any previous year, every person who intends to enter into specified financial transactions in which quoting of PAN is mandatory, and every non-individual resident persons and person associated with them if the financial transaction entered into by such non-individual resident persons during a financial year exceeds Rs. 2,50,000.