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1. What Is PAN?
Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the
form of a laminated card, by the Income Tax Department.
A typical PAN is AABPS1205E.
{Section 139A(7) Expln (b) and (c)}
2. Why Is It Necessary To Have PAN?
It is mandatory to quote PAN on return of income, all correspondence with any
income tax authority. From 1 January 2005 it will be mandatory to quote PAN on challans
for any payments due to Income Tax Department.
{Section 139A (5) (a) and (b)}
It is also compulsory to quote PAN in all documents pertaining to financial transactions
notified from time-to-time by the Central Board of Direct Taxes. Some such transactions
are sale and purchase of immovable property or motor vehicle or payments in cash,
of amounts exceeding Rs. 25,000/-to hotels and restaurants or in connection with
travel to any foreign country. It is also mandatory to mention PAN for obtaining
a telephone or cellular telephone connection. Likewise, PAN has to be mentioned
for making a time deposit exceeding Rs. 50,000/- with a Bank or Post Office or depositing
cash of Rs. 50,000/- or more in a Bank.
{Section 139A (5) (c) read with Rule 114B}
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