PAN Card is an important national ID issued by the Income Tax Department of India to any "person" who applies for it or to whom the department allots the number without an application. This is a laminated card which contains Person's Name, Father's Name, Date of Birth, Permanent Account Number, Signature, Photograph and Date of issue of PAN Card.
PAN enables the department to link all transactions of the "person" with the department. These transactions include tax payments, TDS/ TCS credits, returns of income/ wealth/ gift /FBT, specified transactions, correspondence, and so on. PAN, thus, acts as an identifier for the "person" with the tax department. PAN was introduced to facilitates linking of various documents, including payment of taxes, assessment, tax demand, tax arrears etc. relating to an assessee, to facilitate easy retrieval of information and to facilitate matching of information relating to investment, raising of loans and other business activities of taxpayers collected through various sources, both internal as well as external, for detecting and combating tax evasion and widening of tax base.
It is mandatory to quote PAN on return of income, all correspondence with any income tax authority. From 1 January 2005 it is mandatory to quote PAN Card on challans for any payments due to Income Tax Department.
It is also compulsory to quote PAN in all documents pertaining to the following financial transactions:-
Sale or purchase of any immovable property valued at Rs.5,00,000/- or more;
Sale or purchase of a motor vehicle or vehicle, [the sale or purchase of a motor vehicle or vehicle does not include two wheeled vehicles, inclusive of any detachable side-car having an extra wheel, attached to the motor vehicle;]
Opening any type of bank account or a Demat Account.
A time deposit, exceeding Rs. 50,000/- with a banking company.
A deposit in cash amounting to Rs.50,000/- or more during any one day, in any account with Post Office Savings Bank or a bank.
A contract of a value exceeding Rs.1,00,000/- for sale or purchase of securities.
Making an application for installation of a telephone connection (including a cellular telephone connection).
Payment to hotels and restaurants against their bills for an amount exceeding Rs.25,000/- at any one time;
Payment in cash for purchase of bank drafts or pay orders or banker's cheques for an amount aggregating Rs.50,000/- or more during any one day;
Payment in cash in connection with travel to any foreign country of an amount exceeding Rs.25,000/- at any one time.