Is PAN compulsory for all? [Must know]

Introduction

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. 

Conclusion

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.