Suresh wanted to start a sole-proprietorship form of business. He expects that his annual turnover is likely to be more than ₹ 15 lakhs. His friend Anil advised him to obtain a PAN number from Income Tax Department. Suresh wanted to know the meaning and importance of PAN and also the parties who must have a PAN card. Anil explained him the meaning and importance of PAN and also explained the different parties who must have PAN card. In the light of the above:(a) Give the meaning and importance of PAN as described by Anil with Suresh. (b) Also, state the various parties that must have a PAN card.

Question

Accepted Answer

(a) PAN (Permanent Account Number) is a ten-digit alphanumeric number allotted by the Income Tax Department that enables linking of all transactions of a person with the department. Importance: It is mandatory for filing income tax returns, for all business transactions above specified limits, and helps in tracking financial transactions to prevent tax evasion. (b) Parties that must have a PAN card: (i) Every person whose total income exceeds the taxable limit. (ii) Every manufacturer of dutiable excisable goods. (iii) Every person carrying on business with turnover above specified limits. (iv) Every importer or exporter. (v) Every contractor or sub-contractor. (vi) Every person who wants to enter into a business transaction above a specified amount. (vii) Every person who is required to file a return of income. (viii) Every person liable to pay excise duty or service tax.