The Permanent Account Number or PAN Card is a very important piece of document that everyone in India – local and foreigners alike – need to have as proof of their responsibility to adhere to the various laws of the land related to the conduct of financial transactions. While PAN is generally considered the best tool for ensuring compliance with tax laws, its purpose is not only limited to such transactions. As a matter of fact, the Permanent Account Number is a fundamental requirement in the successful completion of certain financial transactions.
Here are 15 financial transactions where your PAN Card is mandatory.
1. Buying or selling of an immovable property with a current market value of at least Rs 10 Lakh. Before 2016, the limit was Rs 5 Lakh. Additionally, all properties that have been assessed and valued by the Stamp Valuation Authority to have a value of at least Rs 10 Lakh will also require the furnishing of the PAN.
2. Buying or selling of a motor vehicle, excluding two-wheeled motor vehicles.
3. Making a time deposit with cooperative banks, NBFC companies, the Post Office, and Nidhi will require the showing of PAN. Before the new ruling was implemented in 2016, making a time deposit amounting to at least Rs 50,000/- with a bank required the PAN. Now, the amount was eased off, but you are still required to quote your PAN for such transactions. Moreover, all time deposits that accumulate to a total of more than Rs 5 Lakh for the whole year will also be subject to the showing of PAN.
4. Opening a new bank account except a Time Deposit account will require PAN. However, if you are only going to open a Basic Savings Bank Deposit Account, PAN is generally not required. All other types of bank accounts including those offered by Cooperative banks will require PAN. Before 2016, all new bank accounts regardless of type required the quoting of the PAN.
5. Any expenses incurred at a restaurant or hotel exceeding Rs 50,000/- and paid for in cash will be subject to the presentation of PAN. Prior to 2016, the limit was Rs 25,000/- that can be paid by any mode.
6. Buying bank drafts, banker’s checks, and pay orders in excess of Rs 50,000/- on any one day will require the quoting of the PAN. In the past, the requirement was a total aggregated daily amount of at least Rs 50,000/.
7. Making a cash deposit in excess of Rs 50,000/- with a banking company in one day will need your PAN. Before 2016, the ruling was an aggregated amount equal to or greater than Rs 50,000/- during any one day.
8. Buying or selling of securities with a value of greater than Rs 1 Lakh.
9. All expenses incurred at any one time related to foreign travel whether it is the purchase of transport fares or the payment of fees to travel agents. All cash payments in excess of Rs 50,000/- will necessitate the quoting of the PAN. The same rule applies when buying foreign currency whether you are going to travel abroad or not. Prior to 2016, the limit was Rs 25,000/- at any one time.
10. Applying for a credit card whether it is from a banking company or any other recognized institution or organization for credit cards. The new 2016 ruling also requires cooperative banks to comply.
11. Buying mutual fund units in excess of Rs 50,000/-. In the past the requirement was Rs 50,000/- or more.
12. Buying or selling of shares of an unlisted company where the value is in excess of Rs 1 Lakh for every transaction. The opening of a demat account has now been included in the new ruling for mandatory PAN quoting as of 2016.
13. Buying and selling of any item, product, goods, or services in excess of Rs 2 Lakh for every transaction. This is a new ruling included in the revised guidelines for the PAN-mandatory financial transactions.
14. Purchasing of prepaid instruments such as cash cards and other instruments that are issued under the government’s Payment & Settlement Act provided the cash payments accumulate to more than Rs 50,000/- in one year.
15. Paying life insurance premium amounting to more than Rs 50,000/- in one year. The old requirement was Rs 50,000/- or more in one year.
These new rulings are effective as of January 1st, 2016. These changes have been made to make living in India more enjoyable by increasing the limits where PAN is required.