Friday, November 13, 2009



Perhaps every citizens by now know that in the recent budget a provision has been incorporated that any persons having invested money in fixed deposit would require to quote the pan number. This provision will be applicable to all persons irrespective of the fact that he or she is not even income tax payers. The banks ar being advised to deduct money if no pan numbers are quoted even by non income tax payers from April next. In case wrong mentionning of Pan card number by depositors there would be 20% deduction of tax, as a penalty.

Till recently Pan card was a necessity for the income tax payers who submit income tax returns annually. now a days pan card is necessary for buying a car, or owning a cell phone number. Now pan card would be necssary for Fix Deposit in Bank even if he not a tax payer.

A few years ago pan card was also necessary whosoever makes foreign travel. Even for those people it was necessary to submit IT returns even if he was non income tax payers.( It was necessary for such person to submit nil return). While submitting nil return he had to quote his pan number. This provision has been abolished a few years back. Now Pan card is required for any kind of financial transaction..

The matter of obtaining a pan card for individual has gained importance now because from now onward for even if a person's total income is less than taxable income and he keeps money in bank's fixed deposit he would be required to have Pan card. This is going to be the law from next April. I would there fore like to recommend all persons having fixed deposit in bank or in Government or non Government organisation to apply for PAN number for his own benefit. What is a PAN CARD ?
I will try to answer like a lay man. The PAN is the abbreviation of Permanent Account Number . Actually this is a unique number allotted to individual or a corporate entity by department of income tax, Government of India. It is more an identification number . The PAN card is a plastic coated/laminated card containing an alphanumeric number, mentioning name, father's name, date of birth, the signature, person's photo and, of course, the PAN number and logo of government. of India and dept. of IT. By default , a PAN number has five letters first, then four digits and then one letter again. The uses of Pan card was for mainly following reasons.

1 Till now, it is mandatory to have one and only one fore every Indian who's income exceeds tax free limit. ( this provision is being changed from next April)
2. It serves as an photo-identity card as an Indian citizen .

With the new change in law pan number become necessary for everyone who has FD account in Bank including a widow who may earn an income of below Rs one lakh ninety thousand.. The threshold limit for payment of income tax for all categories of persons have recently been upwardly revised and most of the retired senior citizen and some of the ladies have become out of income tax net. From next April a widow earning below the threshold limit ,even if she has submitted the form 15 , income tax would be deducted by bank for her fixed saving in bak, in case Pan number is not submitted. In certain case if pan numbers are wrongly quoted, may be due to inadvertence, then tax will be deducted at the double the rate. This is where shoe would pinch for a widow or a lone lady or for a senior citizen. The persons having bank FD etc must be very vigilant if they want to avoid unnecessary deduction of tax and penalty from now onward.

Even this provision would be applicable to ordinary common salary earners also unless he submits pan card number. Many senior citizen never is to apply for pan card thinking that they were beyond the ambit of income tax hence no pan card was required. This was a valid argument till now. But from next April onward if pan card number is not submitted to the Bank or any other other authorities income tax would be deducted on payment of interest.

My humble suggestion is not to panic . There are ample time to apply fopr a pan card. In any case the provision would be applicable from next April only. We have one years time to get organised for a pan number. Having a pan card is very useful and easy. It can be used as a photo identity card also beside using for all financial transaction. This number is actually isued by income tax department to track any financial transaction and also to ensure non evasion of tax by eligible citizen. The pan card is very useful for all the citizens, for our country donot have a Social security number like devlop countries of the world.. The importance of PAN card would continue till unique Identification number is issued by the central Government to each citizen. The project has already been taken up recently. A few persons recently wrote to me asking as to how and where PAN card could be applied?

The Income tax Department has authorised UTI investors services Limited to manage and issue pan card for smooth issuance of the card.. It can be applied on line also through internet ascility for the application form. There is a specific application form and that should be filled up to enable UTI Invetors Services Limted to issue PAN number with phoogtraph. A small fee is also charged for the fascility. The pan card can be issued to NRI also.

There are enough time now and all perons having income out of bank fixed deposit, company fixed deposit and having fixed deposit from any other governmental and non govrnmental organsation should apply for PAN number though they might not be income tax payers. In case they donot take PAN Card and donot submit on time the authorities would deduct income tax at the rate of 10% to 20% at the time of payment of interest in due course. Hence it is recommended that steps should be taken up by all concerned not only to apply and obtain the Pan number but to submit the same to the authrities concerned at the earliest.


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