Avoid using PAN card as an Identity Proof – Know when to quote PAN

PAN (Permanent Account Number) was introduced way back in 1972 (old series format). PAN card has now become an important and ‘must have’ document. It enables the Income Tax (IT) department to link all financial transactions of an individual with the department.

It is mandatory to quote your PAN in various financial transactions. IT department and the Government is insisting the usage of PAN in many financial transactions to curb black money.

Most of us also use PAN card as an Identity proof. Sometimes, we use it to book railway tickets, we submit a copy of PAN card to change Mobile SIM, for hotel reservations etc., Is this correct? Is it safe? Can it be misused?

PAN card should be used only where it is specified by the Income Tax Department and in other laws wherever it is mandatory. If you use PAN card as an Identity proof, there are chances that it can be misused to commit financial frauds, crimes and forgery. It can be used to carry out benami transactions.

So, it is very important to know when and where PAN number is to be used.

What is PAN Card?

PAN is a ten-digit alphanumeric number, issued in the form of a card by the Income Tax Department. PAN facilitates linking of various documents including; payment of taxes by an individual, information on investments, loans etc.,

PAN contains ten characters (alphanumeric). The characters are not random. For Example – AFDPR8190K, where the first 5 three characters i.e. “AFD” in the PAN are alphabetic series running from AAA to ZZZ, fourth character of PAN i.e. “P” represents the status of the PAN holder (P for Person / Individual). Fifth character i.e. “R” represents first character of the PAN holder’s last name /surname. Next four characters i.e. “8190” are sequential numbers running from 0001 to 9999. Last character i.e. “K” in this example, is an alphabetic check digit.

Financial transactions where quoting of PAN is mandatory

Below are the financial transactions where quoting your PAN is compulsory. All these new rules will come into effect from 2016.

• As per Budget 2015 quoting of PAN is being made mandatory for any purchase or sale exceeding the value of Rs 1 Lakh.
  • New Rule : This limit has now been increased to Rs 2 Lakh. These transactions can be both by cash or card.
• On sale or purchase of any immovable property valued at Rs 5 Lakh or more.
  • New Limit : The monetary limit for quoting PAN for sale or purchase of immovable property has been raised to Rs.10 lakh from Rs.5 lakh. Properties valued by Stamp Valuation authority at amount exceeding Rs.10 lakh will also need PAN.
• On sale or purchase of a motor vehicle (two wheeler is excluded).
• If you book a Time Deposit exceeding Rs 50,000 with a bank or with a Post Office then PAN should be quoted.
  • New Rule : The rule on deposit exceeding Rs 50,000 with Post Office Savings Bank has now been relaxed. But, you still need to quote PAN for all post-office time deposits. Deposits aggregating to more than Rs 5 Lakh during the FY will also need PAN.
• While opening a Bank account.
  • New Rule : PAN is not compulsory while opening a ‘basic Savings Bank deposit account’. But all other bank accounts, including those opened with cooperative banks, will have to quote PAN.
• PAN should be quoted while applying for a telephone connection (including new mobile connection).
  • New Rule : The government has also done away with the need to quote PAN while applying for a telephone or cell phone connection.
• Payment to hotels and restaurants against their bills for an amount exceeding Rs 25,000 at any one time.
  • New Rule : PAN needs to be quoted only for a cash payment for a hotel or restaurant bill of Rs.50,000 as against Rs.25,000 applicable at present for any mode of payment.
• Payment in cash in connection with travel to any foreign country of an amount exceeding Rs 25,000 at any one time. Also, on Forex purchases.
  • New Limit : The applicable new limit is Rs 50,000.
• On purchase of bullion which is worth Rs 2 Lakh or more and Jewellery whose value is Rs 5 Lakh or more.
  • New Rule : On purchase of bullion or jewelry worth Rs 2 Lakh per transaction.
• If you are using Prepaid Money wallets & Gift cards (Pre-paid instruments & cash cards), quoting your PAN is now mandatory for transactions aggregating to more than Rs 50,000 in a year. (New Rule)
• If you buy shares which are  not listed on stock exchanges which are worth more than Rs 1 Lakh per transaction, PAN is mandatory. (New rule)
• Payment in cash for 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 of Rs 50,000 or more with a bank during any one day. This is also applicable on Bank DDs,Pay orders & Bankers Cheque. Also, PAN is mandatory for cash deposits aggregating to Rs 2.5 Lakh or more during the period 9th Nov to 30th Dec, 2016.
• While applying for a Credit or Debit card.
• While applying for a Demat account.
• On contract for sale & purchase of financial securities worth Rs 1 Lakh.
• Payment exceeding Rs 50,000 on debentures & bonds.
• Payment of an amount of Rs 50,000 or more to a Mutual Fund for purchase of its units.
• Payment of an amount aggregating fifty thousand rupees or more in a year as life insurance premium.
• It is mandatory to provide a copy of your PAN card while obtaining registration under different statutes like Excise, Service Tax, Value Added Tax (VAT) etc.,
• While filing your Income Tax Return.
• If you are staying in a rented property, you need to submit your Landlord’s PAN details to your employer to claim HRA allowance (if HRA exemption is above Rs 8,333 pm or Rs 1 Lakh pa).
• If the person with whom transaction has been entered and if Tax has to be deducted at source, then PAN will have to be given (example – your employer). If PAN is not given then TDS at the rate of 20% will be deducted.
  

Quoting PAN will help create an audit trail of all high-value transactions by one particular individual and help the tax department determine if it is in line with the declared income of that person. (You may like reading : How Income Tax Department tracks High Value Financial Transactions?)

But, it is advisable to avoid using PAN card / PAN details as an identity proof at any source other than income tax-related matters. Depending on the purpose and requirement (as mentioned above), use it prudently. You may submit other ID proofs like Aadhar card, Voter Id, Driving license etc., if PAN is not mandatory.

Also, you can mention ‘to whom and for what purpose’ you are submitting PAN card copy or PAN card details. For example – for applying HDFC bank credit card. You may quote specific entity name, purpose, date and then sign the PAN copy, to avoid any mis-use.

Latest Update (13-January-2017) : The Income Tax Dept has prescribed certain changes in the existing design of the PAN card as below. Accordingly, new PAN cards will be issued by incorporating these changes. Kindly note that the existing PAN card holders are not required to apply for new PAN card.

i) Quick Response (QR) code having details of the PAN applicant is printed on PAN card for enabling verification of the PAN Card;

ii) Legends have been incorporated for particulars Name, father’s, and date of birth fields. Position of PAN & signature has been changed.

iii) Position of PAN & signature has been changed.

Latest Update (17-June-2017) : Quoting of PAN & Aadhaar number have now been made mandatory for opening of Bank accounts. Also, Aadhaar number and PAN have to be quoted for all the financial transactions of above Rs 50,000.

Continue reading :

• How to Cancel or Surrender PAN-Card & Aadhaar Card of a deceased person?
• How to check PAN-Card Validity Status online?

(Reference : incometaxindia.gov.in)