dentification by number. That is the rationale behind the income tax department's move to introduce the Permanent Account Number, otherwise known as PAN.
In fact, it brings to mind Amitabh Bachchan boasting of his reel life badge number '786' as the rebel port worker in Deewar.
Whether you like it or hate it, you now have a number taking predominance over your name as far as the taxman is concerned.
What is the PAN?
You could compare it to the all-pervading Social Security Number allotted in United States of America.
Your PAN is a unique 10-digit alphanumeric number (AABPS1205E, for example) that identifies and tracks an individual in the taxman's database.
Each individual will have a unique PAN (and every individual can own only one). Obtaining more than one PAN is against the law.
When you apply for one, it will be given to you in the form of a laminated card.
Why you need one
Not having a PAN so the taxman cannot track you down is a dangerous (and, might I add, stupid) strategy.
We cannot overestimate the significance of PAN. Without it, you would be like the aliens in the television serial, Third Rock From The Sun, trying desperately to live a life like most human beings without being able to get it right.
Take a look at the times you are expected to produce a PAN:
- When you file an income tax return
- When you open a bank account
- When you deposit cash of Rs 50,000 or more in a bank
- When you open a bank fixed deposit of Rs 50,000 or more
- When you open a post office deposit of Rs 50,000 or more
- When you buy/ sell shares and mutual funds
- When you buy/ sell property
- When you buy a vehicle
- When you take a loan: home/ personal/ other
- When you get a job
- When you install a telephone (even a cell phone)
- When you pay in cash to hotels and restaurants against bills for an amount exceeding Rs 25,000 at any one time
Having a PAN is mandatory in virtually every money transaction.
You also need to mention it in every transaction you have with the tax officials.
What's your excuse for not having one?
Earlier, we told you how to get yourself a PAN card.
Has that got you going?
No?
What's your excuse?
Incidentally, we conducted a small study on why people have not applied for the PAN.
See if your excuse fits.
- No time to stand in the queue and make an application.
- No intention of dealing with income tax authorities directly for application as well as follow up on non-issue of PAN.
- No time for compiling the loads of documents required for making an application.
- Not aware that PAN is compulsory.
None of the reasons listed above are justifiable.
Applying for a PAN is no longer difficult; it will not take more than 10 minutes of your time.
You can even do it online.
If that is too much of a bother, you can take the help of a chartered accountant or a tax consultant.
Go and get yourself a PAN now! You should get one within a month.
Relax With Tax is a Mumbai-based personal tax & finance solutions provider.
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