For those who are new to taxation and have started earning now, must have heard a lot about PAN (Permanent Account Number). We also fear Taxes specially Income Taxes a lot as we hear that the tax guys keep a watch over your finances etc. from our elders and seniors.
What is this PAN and what are implications of having a PAN for us?
Let us understand in a simple to understand language. PAN or Permanent Account Number is your identity for Income Tax purposes. It is like your Income Tax Account number which keeps your record of taxes paid by you or deducted by companies from your salaries and for settling your income tax liabilities.
It has 10 characters with first 5 characters as alphabets, next 4 numbers and last character also a alphabet.
Now the question is - Is this only for filing of Income Tax returns and settling tax liability?
PAN now a days has evolved as a tool for many other purposes. Such as - acceptable proof of identity at almost all places like opening of bank account, getting a Passport etc. to name a few, tool for government to allow many other registrations such as VAT, Service Tax, IEC etc., tool for government to monitor high value transactions such as buying of immovable property (houses etc.). So, getting a PAN is not necessarily for filing tax returns only.
Now another question arises - Is is necessary to file tax returns if you have PAN (you may have to get a PAN because of this being accepted as identity proof or any other reason as mentioned above).
By getting a PAN itself, you do not become liable to file income tax return or pay taxes or become answerable to Income Tax department as is commonly believed. There are separate rules for filing of tax returns and you can safely keep a PAN without either filing a return or pay taxes unless you fall in the category of those who are required to file income tax return as required by Income Tax law in India.
PAN is good for all of us and it is desirable to have it.
What is this PAN and what are implications of having a PAN for us?
Let us understand in a simple to understand language. PAN or Permanent Account Number is your identity for Income Tax purposes. It is like your Income Tax Account number which keeps your record of taxes paid by you or deducted by companies from your salaries and for settling your income tax liabilities.
It has 10 characters with first 5 characters as alphabets, next 4 numbers and last character also a alphabet.
Now the question is - Is this only for filing of Income Tax returns and settling tax liability?
PAN now a days has evolved as a tool for many other purposes. Such as - acceptable proof of identity at almost all places like opening of bank account, getting a Passport etc. to name a few, tool for government to allow many other registrations such as VAT, Service Tax, IEC etc., tool for government to monitor high value transactions such as buying of immovable property (houses etc.). So, getting a PAN is not necessarily for filing tax returns only.
Now another question arises - Is is necessary to file tax returns if you have PAN (you may have to get a PAN because of this being accepted as identity proof or any other reason as mentioned above).
By getting a PAN itself, you do not become liable to file income tax return or pay taxes or become answerable to Income Tax department as is commonly believed. There are separate rules for filing of tax returns and you can safely keep a PAN without either filing a return or pay taxes unless you fall in the category of those who are required to file income tax return as required by Income Tax law in India.
PAN is good for all of us and it is desirable to have it.
thanks for this valuable blogs.
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