7 Uses & Benefits of Your PAN Card Which You Must Know!

Are you looking for information about a PAN card? When it comes to managing finances, one of the most critical documents you need is a PAN card. So it's essential to know the basics. A PAN card contains your PAN (Permanent Account Number), name, and date of birth. PAN is a 10-digit alphanumeric identifier that is mainly used for tax purposes.

The PAN card is issued by the Income Tax Department of India to an individual or entity. So why Pan card is necessary? A PAN card is mandatory for filing income tax returns and other critical financial transactions explained in this blog.

7 Significant Things to Know About PAN Card

This article walks you through 7 vital benefits and uses of a PAN card. Let's get started!

1. It is Mandatory to Open Bank Accounts

One of the primary uses of a PAN card is to open bank accounts. In order to open a bank account, you must provide your PAN number as proof of identity. This is an essential requirement for opening any kind of bank account, be it a savings account, current account, or fixed deposit. Saving account plans under the Pradhan Mantri Jan Dhan Yojana is the only exception to this rule.

2. You Need it to File Income Tax Returns (ITR)

Another benefit of a PAN card is that this is the only document you need to produce to prove your identity to file ITR. Before the introduction of the PAN card in 2005, taxpayers had to provide various documents to confirm their identity. However, with the PAN card, this is no longer the case. PAN card also makes it easy for Income Tax Department to track your sources of income.

3. It is Used to Check CIBIL Score

You can check your CIBIL score using a PAN card. CIBIL is a score which depicts your creditworthiness and is based on your credit history. Banks and financial institutions use it to assess your ability to repay loans. So, checking and maintaining a good CIBIL score is critical to get any loan or financial product. The credit bureaus also use your PAN to locate your debts and repayments efficiently.

4. You Need it to Buy or Sell Goods and Services

The primary purpose of the PAN card is to make sure that all transactions made by individuals or firms are tracked by the government. Quoting the PAN card while doing transactions related to buying or selling goods and services is mandatory. Every financial transaction involving more than ₹ 50,000 requires you to produce your PAN card.

5. It is Required While Making Investments

Investments can be made in many different ways. However, if you are buying stocks, mutual funds, or other financial instruments, then you need to provide a valid PAN card for authentication. Why is a PAN card required for investment? Well, this is to ensure that every transaction is tracked and reported to the Government of India.

6. It is Mandatory if You Want to Register a Business

Whether you are setting up a company, registering a business, or forming a partnership firm, it is mandatory to get a PAN card before you can do so. This is because you need to get a Tax Registration Number (TRN) to register any firm. And to get TRN, it's mandatory to provide the PAN number of all the business owners.

7. You Need it For Foreign Transactions

If you send or receive money abroad, you need to provide a valid PAN card. It is necessary under the Prevention of Money Laundering Act. This is one of the most vital uses of a PAN card, as the PAN details ensure that all the global transactions of an individual or firm are tracked and reported to the concerned authorities.

Hopefully, this article has helped you understand PAN cards better, and you are now familiar with the various aspects of this important financial document. There are multiple benefits of the PAN card - It helps in taxation, checking CIBIL scores, doing financial transactions, and more.

PAN card also serves as identity proof and is mandatory for various purposes. It is crucial to keep it safe and to update it whenever necessary.

​# This is a guest article authored by MoneyTap. For any enquiries or details, you can visit the author's website.