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Permanent account number i.e. PAN card In today’s time, it is no longer just a means of filing Income Tax Return (ITR). In the modern banking and financial system, it has become the backbone of every small and big financial transaction. Be it opening a new bank account, investing in mutual funds or stock market, buying a new car or any valuable property – PAN card has been made mandatory everywhere.
If you do not submit your PAN card at the time of any major transaction, or even enter the wrong PAN number unknowingly, not only your transaction may be put in limbo, but you may also be hit with huge tax deductions (higher TDS) and strict legal action by the Income Tax Department. Let us understand in detail in which 5 big transactions PAN card is mandatory and what can be the punishment for ignoring the rules.
Giving PAN is mandatory in these 5 big financial transactions
The main objective of the government under Income Tax Rules is to track large and high-value transactions by linking them to the actual annual income and tax profile of the taxpayers, so that black money and tax evasion can be curbed. Under this, PAN is mandatory for the following 5 transactions:
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1. Property worth more than ₹20 lakh: If you are buying or selling any land, house, shop or flat and its registry or value more than 20 lakh rupees If so, then it is mandatory for both the parties (buyer and seller) to provide their PAN number.
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2. Car worth more than ₹5 lakh: On purchase of any new car, SUV or heavy commercial motorcycle/vehicle from the showroom, the price of which More than Rs 5 lakh Yes, it is necessary to provide PAN card.
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3. Purchases above ₹2 lakh: If you buy heavy jewelery from a goldsmith through cash or digital means, or More than Rs 2 lakh If you pay for any other goods and services (like luxury vacations or hotel bills), PAN card will be asked for.
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4. Unlisted shares worth more than ₹1 lakh: If the amount of transaction is made outside the stock market i.e. in the purchase and sale of shares of an unlisted company crossed Rs 1 lakh If you do so, then without PAN this deal will be considered invalid.
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5. Demat and Investment Accounts: PAN card is the primary document for KYC while opening a new Demat account to invest in the stock market, mutual funds, bonds or while making a large investment in any financial institution.
Can I get notice for not giving PAN or giving wrong information?
Due to today’s strict automated rules, in transactions where PAN is mandatory, your work cannot proceed without it. But if someone wants to show cunningness Wrong or fake PAN number registers, then under section of the Income Tax Act, Direct cash fine of ₹10,000 Can be applied. Other than this:
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Your TDS refund may get stuck due to wrong PAN.
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The tax credit you receive will not appear in your account.
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The data analytics team of the tax department may consider you suspicious and put you under additional scrutiny.
How does the tax department keep an eye? Once you enter your correct PAN number in a transaction, it will be directly reflected in the Statement of Financial Transactions (SFT), Annual Information Statement (AIS) and form 26AS It starts reflecting in me. After this, the Income Tax Department’s modern risk assessment software compares your declared ITR income and these expenses. If your declared annual income is ₹5 lakh and property worth ₹25 lakh is registered on your PAN, the department can immediately issue a notice to you seeking clarification of the source of income.
Can Form 97 be used if there is no PAN?
under income tax rules Form 97 Designed as a temporary arrangement for those citizens who do not currently possess a PAN card for any valid reason but are required to undertake a transaction where PAN is asked for.
However, according to financial experts, Form 97 cannot be considered a permanent or legal substitute for PAN card. Citizens or taxpayers for whom it is mandatory by law to make a PAN card, cannot resort to Form 97 by deliberately not making a PAN card. If they do so, it will be considered a violation of the rules. Therefore, it is wise to get your PAN card made in time and use only the correct and updated PAN number everywhere.