We all know that having a PAN card is a must for almost all kinds of financial transactions. In this article, let’s understand when having a PAN card is mandatory and we will also cover the consequences of not having a PAN though it’s mandatory.
For whom PAN is compulsory?
Now let’s understand the scenarios under which holding a PAN is mandatory.
1. If the Taxable Income of a Person in a financial year exceeds the Basic Exemption Limit, then holding a PAN is a must.
The Basic Exemption Limit varies as per the tax scheme. If one chooses the New tax regime, then the applicable basic exemption limit is Rs. 3 lakhs. Instead, if they opt for an Old scheme, then the Basic Exemption Limit varies as per the age of an individual which is as follows:
|Age of an Individual||Basic Exemption Limit (in Rs.)|
|Up to 60 yrs||2,50,000|
|> 60 yrs but below 80 yrs||3,00,000|
|80 yrs or more||5,00,000|
So as per the scheme chosen, one needs to check the Basic Exemption limit applicable and if such limit exceeds in a financial year, then they need to apply for a PAN.
2. Turnover or Gross Receipts of a Business or Profession is about to exceed Rs. 5 lakhs in a financial year then one should apply for a PAN.
3. If the estimated income to be received in a financial year is subject to TDS, then having a PAN is mandatory.
4. To open a Current Account or Cash Credit account with a Bank or Co-operative bank or Post-office also needs a PAN. Also if Cash deposits or Cash withdrawals in a Bank or Co-operative bank or Post-office during a financial year is Rs. 20 lakhs or more in a financial year, then PAN is compulsory.
So, if any person is covered under either of the criteria mentioned above, then they should have a PAN in case they don’t have an existing PAN in their name.
Penalty for non-compliance
Any person who is covered under the above criteria but fails to apply for a PAN shall be liable to a penalty of Rs. 10,000 per failure as per section 272B.
So, this way one can know whether having a PAN is compulsory for them or not. Those who want to apply for a PAN may either apply offline or through an online mode.
Hope you have enjoyed the article, thank you for your time.
Author is a Qualified CMA with an experience of more than 8 years in the industry. He is also an All India Rank holder in both Inter (AIR-26) & Final (AIR-46) examinations of ICAI. He loves to writes articles on Income Tax & GST.