WHY TO GET A PAN NUMBER OR PAN CARD?
Obtaining PAN is
may be optional or voluntary like passport, driving license, Aadhaar, etc.
However, its use is mandatory at required places, like PAN for high-value
financial transactions, Driving License for motor driving, passport for foreign
travel and more.
·
For payment of direct taxes
·
To file income
tax returns
·
To avoid deduction of tax at a higher rate than due
·
To enter into a specific transaction such as:
·
(a) Sale or purchase of immovable property value exceeding specified
limit (b) Sale or purchase of a vehicle other than a two-wheeler.
·
Any mutual fund purchase.
WHO MUST APPLY FOR
PAN- Permanent Account Number?
1. Anybody who
earns a taxable income in India, including foreign nationals who pay taxes
here.
2. Anybody who runs
a business (be it retail, services or consultancy) that had total sales,
turnover or gross receipt exceeding a specified limit in the previous financial
year. (From December 5, 2018. The new rule has made it mandatory for all
businesses with a net turnover/ gross income of up to Rs 2.5 lakh per year to
have a PAN)
The most common the word which affects the life professional, corporate and other people is PAN, in
this advance era still, people have question or myth that we don’t get a salary
from anywhere so we don’t require PAN Card. In this write-up, we will have an
insight under the concept of PAN Card. The primary objective of PAN is to use a
universal identification key to track financial transactions that
might have a taxable component to prevent tax evasion. The PAN number remains
unaffected by a change of address throughout India.
PAN or permanent the account number is a unique 10-digit alphanumeric identity allotted to
each taxpayer by the Income Tax Department under the supervision of the
Central Board of Direct Taxes. It also serves as an identity proof. PAN Card is
mandatory for financial transactions such as receiving a taxable salary or
professional fees, sale or purchase of assets above specified limits, buy
mutual funds and more.
HOW TO APPLY?
1. Use ‘Form 49A’
or ‘Form 49AA’ as applicable to you. Find more details at
incometaxindia.gov.in.
2. You can find the
location of PAN card offices in any city from the websites of the Income Tax
Department or National Securities Depository Limited (NSDL)or UTI
Infrastructure Technology (UTIITL).
3. You will need
copies of proof of Identity and address.
4. You can also
apply online through websites of the I-T Department (Income Tax) or National
Securities Depository Limited NSDL or UTI Infrastructure Technology (UTIITL).
WHICH FORM TO
USE?
|
|
49A
|
49AA
|
Individual Citizens of India.
|
Individual who are not Indian
Citizens
|
HUF-Hindu Undivided families.
|
|
Companies Registered in India.
|
Companies Registered outside
India.
|
Associations Registered in
India.
|
Firms Formed or Registered
outside India.
|
Firms’, Including LLP’s Formed
or Registered in India.
|
LLP’s Formed or Registered
outside India.
|
Local Authorities
|
STRUCTURE OF YOUR
PAN – PERMANENT ACCOUNT NUMBER
For illustration -A
typical PAN is AFZPK7190M. The combination in which alphabet and numbers are
arranged is explained further.
·
First three characters i.e. “AFZ” in the above PAN are alphabetic series
running from AAA to ZZZ.
·
Fourth character of PAN i.e. “P” in the above PAN represents the status
of the PAN holder. “P” stands for Individual, “F” stands for Firm, “C” stands
for Company, “H” stands for HUF, “A” stands for AOP, “T” stands for TRUST etc.
·
Fifth character i.e. “K” in the above PAN represents the first character of
the PAN holder’s last name/surname.
·
Next four characters i.e. “7190” in the above PAN are sequential number
running from 0001 to 9999.
·
Last character i.e. “M” in the above PAN is an alphabetic check digit.
A pan card is
required for a lot of purposes thus making it an extremely valuable and
indispensable part of most people lives. The likeliness of PAN identity theft
has grown with the growing importance of PAN. Merely safeguarding the physical
copy cannot prevent misuse. Information can be misused very easily for benami
property transactions or purchase of tickets of high value, as a majority of
transactions demand simply quoting of the PAN or a photocopy of the PAN Card.
Thus, a copy of your PAN card or its number could be quoted in transactions
that you are not even apart.
7
Rules to Follow When Taking a Loan
If we had enough money for all our needs,
the world would have been a happy place. But the reality is different. Needs of
modern households are constantly growing but earnings are not growing in the
same proportion. This necessitates the need of a loan to meet various expenses like
buying a house, arranging a grand wedding ceremony, meeting medical expenses
and in some cases paying off bundles of existing debts.
The gap between what we can afford and what
we aspire to become is a huge opportunity for lenders. Technology has made it
easier for the borrowers to compare interest rates offered by different lenders
and zero in on an option that best matches their needs. But, at the same time,
the possibility of getting confused in a sea of options is not entirely
eliminated.
So, here we will talk about the golden
rules of borrowing.
Rule #1 Do not
borrow more than what you can repay
Page Contents
·
Rule
#1 Do not borrow more than what you can repay
·
Rule
#2 Never borrow to splurge
·
Rule
#3 Keep the loan tenure as short as possible
·
Rule
#4 Never delay the payments
·
Rule
#5 Keep looking for lower rates
·
Rule
#6 Do not keep loans running just to avail tax benefits
·
Rule
#7 Read the fine print
This is the first rule of borrowing; you
should not borrow at all if you think your needs can be met from other sources.
However, if you do, your EMI outgo should never exceed 50 percent of your
monthly income. Before you take a loan, calculate in detail using an EMI
Calculator to find out the monthly EMI that you would have to pay in the future. If the EMI makes 50-70 percent of your income, it will be extremely
difficult for you to save for the future. In such cases, retirement funds and
savings to fund your child’s education will have to be compromised. Borrow an
amount that keeps your debt-to-income ratio within acceptable limits.
Rule #2 Never
borrow to splurge
It is not advisable to borrow for
discretionary expenses. For example, you may get several travel loan offers
from different banks but splurging on a lavish Travel makes sense only when you
have saved up enough. Taking up a debt for such entertainment expenses has the
highest potential to pull you into a debt trap. Secondly, you should never
borrow for investing. Any investment, including the most secure ones, cannot
meet the cost of a loan. High-yielding investment options like equities are too
volatile in nature and if things go wrong not only will you lose money but
would also have to pay the EMIs.
Rule #3 Keep
the loan tenure as short as possible
To lure the customers into paying smaller
EMIs every month, banks offer longer loan tenures. The longest tenure is
offered in case of home loan and it can go as long as 30 years. However, you
should shorten the term until you reach an EMI you think you can afford because
a long tenure also calls for higher interest pay-out. It may be tempting to
choose a longer tenure as it would reduce your EMI but you should use EMI
calculator to ascertain the EMI with different tenures and select the shortest
one affordable in your budget.
Rule #4 Never
delay the payments
It is the most important rule of taking any
type of loan. Being disciplined will not only keep your payments organized but
will also save you huge amounts that would otherwise go out a penalty or extra
interests. Missing payments has a direct impact on your credit
profile and hinders your chances of getting a loan
in the future. While it is extremely important to save and invest, we would not
advise doing so by compromising on your debt payments. In case you do not have
enough resources at hand to pay all EMIs due for the month, prioritize them in
a way that you have to pay the least penalty and interest. However, you should
not make it a habit; every EMI should be paid when due. The best way is to set
standing instructions on your savings/current account for the payment of EMIs.
Rule #5 Keep
looking for lower rates
Why should you keep paying high rates of
interest when you can transfer the balance and avail lower rates? The financial
market, nowadays, has become highly competitive so banks and NBFCs keep coming
up with various offers. As a smart borrower, you must keep your eyes and ears
open for such offers and make the most of them. The earlier you transfer your balance
to a lower rate, the more benefits you can avail. Similarly, if you are looking
to repay your loan, compare the cost of this foreclosure with the amount you
would save and opt for it only when the savings are significant.
Rule #6 Do not
keep loans running just to avail tax benefits
The government offers tax benefits on some
loans. For example, tax deduction on a home loan is offered under section 24 and
80EE of the Income Tax Act. The interest paid on education loan is also fully
deductible. Although these benefits come in handy to reduce the overall cost of
the loan, it does not make sense to keep the loan running just for tax
benefits. Compare the effective cost of the loan with the returns that you could
earn if the amount was invested. Unless you are getting a better return, it is
good to use the amount to repay the loan and get rid of EMI payments once and
for all.
Rule #7 Read
the fine print
Needless to say, it is extremely important
to read the terms and conditions carefully before signing on the dotted line.
Banks may have varied conditions for the same loan so do not blindly go for
one. Also, you should not shy away from asking questions. It is better to be
informed than to regret later. Ask the lender about the extra charges that you
may have to pay under certain conditions. Lenders might slip in some extra
clauses so you must beware.
Lastly, you should never keep your family
in dark about the loans you have taken. Also, do not compromise your retirement
savings to take up a debt. Consider all goals in your budget including
retirement, your kids’ education, etc. and strategize in a way that none of
your basic financial goals are compromised
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