Is PAN Card Necessary for Investment?

29 February 2024
3 min read
Is PAN Card Necessary for Investment?
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The Indian Income Tax Department issues PAN (Permanent Account Number) cards to people and organizations for use in tax-related transactions.

In India, a PAN card is required for many financial operations, including opening a bank account, purchasing or selling real estate, making investments, and submitting income tax returns.

You must thus obtain a PAN card if you intend to make any form of investment in India. PAN cards serve as the investor's unique identity and aid in the government's ability to monitor and confirm the investor's financial activities.

This blog will examine why PAN is necessary for investments and all companies and people. So, continue reading to learn more about this!

Income Tax Calculator

Necessity of PAN Card for Investment

The Permanent Account Number (PAN) card is required for several factors, including-

  1. Required to Start an Investing Account

Opening an investment account, such as a DEMAT, trading, or mutual fund account, requires a PAN card. These accounts cannot be opened without a PAN card.

  1. Tax-related Requirements

In India, a PAN card is a requirement for filing taxes. The revenue from investments is taxed on the individual who makes them. Therefore, the government requests that investors supply their PAN information so that it may track and monitor the revenue from investments.

  1. Identity and Confirmation

The investor's identity may be verified using their PAN card, a recognized form of identification. It guarantees that the investment is being made by an authorized investor and stops fraudulent activity in the stock market.

  1. Makes Hassle-Free Investment Possible

The hassle-free investing process is made possible with PAN cards. The Know Your Customer (KYC) procedure, necessary for investing in mutual funds, stocks, and several other financial instruments, uses the PAN card's data, such as name and address.

Interesting Fact to Know

To keep track of tax-related information for both individuals and corporations, the PAN Card was initially launched in India in 1972.

Investments That Require PAN Card

In India, a PAN (Permanent Account Number) card is necessary for several investments, including-

  1. Equity Shares

Purchasing equity shares listed on Indian stock markets requires a PAN card. In addition, the investor must supply PAN information upon registering for a DEMAT and trading account.

  1. Mutual Funds

Having a PAN card is required to invest in mutual funds. Before investing in mutual funds, the investor must complete the KYC (Know Your Customer) process and supply their PAN information.

  1. Bonds

Purchasing bonds, including corporate and government bonds, requires a PAN card.

  1. Derivatives

Investing in derivatives, such as options and futures, on Indian stock markets requires a PAN card.

  1. Real Estate

If the price of the immovable property is over a specific threshold, a PAN card is required. While registering the property and paying the stamp duty, the investor must supply their PAN information.

  1. Deposits at a Bank

A PAN card is required to open a fixed or recurring deposit account. If the interest received on these deposits exceeds a certain threshold, the bank deducts TDS (Tax Deducted at Source). Therefore, the investor must supply their PAN information to avoid TDS.

 Conclusion

In conclusion, a PAN card is essential to invest in India since it is required to create investment accounts, is needed for tax purposes, aids in identification and verification, and makes the investing process easier.

It is a need for many financial transactions and aids in keeping track of a person's income and tax obligations.

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