The Permanent Account Number, commonly known as PAN card, is an essential document for every Indian citizen who is liable to pay taxes. The PAN card serves as a unique identification number that is assigned to each taxpayer by the Income Tax Department of India. However, the significance of the PAN card is not limited to just tax purposes, but it also serves as the cornerstone of financial identity in India.
What Exactly Is A PAN Card?
A PAN card, short for Permanent Account Number, is a tangible representation of this unique identifier. It’s a crucial document required for tax filing and serves as a means of identity verification. Essentially, PAN is a system that records tax-related information for individuals or entities. Each PAN is distinct, ensuring no duplication.
In India, financial institutions, including banks, non-banking financial companies (NBFCs), credit card companies, and other lenders, use the PAN card as a primary document for identifying and verifying customers. It is mandatory for individuals to provide their PAN card Status details when they open bank accounts, apply for loans, purchase insurance policies, or make investments. The reason why the PAN card is considered to be the cornerstone of financial identity is because of its unique features that make it a reliable, secure, and universal document for financial transactions.
One of the primary reasons why the PAN card is so important for financial identity is because it helps in maintaining the integrity and credibility of financial transactions. The PAN card contains a unique alpha-numeric code that is linked to the individual’s income and tax records. This means that whenever an individual conducts any financial transaction, such as opening a bank account, applying for a loan, or making an investment, the transaction can be traced back to their PAN card. This ensures that there is transparency and accountability in financial transactions, which ultimately helps in preventing fraud and illegal activities.
Another reason why a PAN card is considered to be the cornerstone of financial identity is because it helps in building a credit history. The Credit Information Bureau India Limited, commonly known as CIBIL, is a credit bureau that maintains credit records of individuals and businesses in India. CIBIL score check is a process in which an individual’s credit score is retrieved from the CIBIL database. The CIBIL score is a numerical representation of an individual’s creditworthiness, which is based on their credit history, loan repayment track record, credit card usage, and other financial data.
In order to build a credit history and improve their CIBIL score, an individual needs to have a PAN card. This is because the PAN card helps in establishing the individual’s identity and income, which is crucial for lenders and credit card companies while processing loan or credit applications. The PAN card acts as proof of identity and proof of income, which makes it easy for lenders to verify the individual’s credentials and make an informed decision about their creditworthiness.
Furthermore, the PAN card is also important for availing various government-related financial services such as opening a National Pension System (NPS) account, applying for a passport, and for investing in certain financial products. Not having a PAN card can result in delays and complications while availing these services.
What Makes A PAN Card Significant?
A PAN card holds importance across various procedures. It’s not just necessary for filing income tax returns; it also acts as a universally recognized form of identity verification and is obligatory for specific business and personal transactions.
Here’s a rundown of transactions necessitating a PAN card:
- Filing income tax returns
- Opening a new bank account
- Buying jewelry
- Securing a loan
- Applying for a telephone or gas connection
- Property purchases
- Acquiring a new debit/credit card
- Buying or selling a vehicle above a certain value
- Business registration
- Securities investments exceeding a certain threshold
- Initiating fixed deposits or cash deposits beyond a specified amount
- Payment of insurance premiums surpassing a certain limit
Utilising a PAN card for identity verification Regardless of its usage, a PAN card serves as identity proof rather than address proof. It contains personal details like PAN, name, date of birth, and signature. However, it lacks residential address information, making it ineligible as an address proof. For address verification, documents such as Aadhaar Card, passport, driver’s license, phone bill, or electricity bill are accepted alternatives
In conclusion, the PAN card is the cornerstone of financial identity in India, and it holds significant importance in establishing an individual’s financial credibility and creditworthiness. The PAN card serves as a unique identification number that is linked to an individual’s tax and income records, which ensures transparency and accountability in financial transactions. The PAN card helps in building a credit history and improving the CIBIL score, which is crucial for availing loans and credit facilities. Therefore, it is important for every Indian citizen to obtain a PAN card and maintain it as a reliable and secure document for all financial transactions.
