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A PAN card is a document issued by the Indian Tax Department to people or organisations to make transactions related to tax*. If you want to make any investment in India, a PAN card is a necessary document.
The country’s tax department issues a document known as the Permanent Account Number to people and organisations. The PAN enables you to make transactions related to taxation. In India, you require a PAN card for investment and other financial operations, which include opening a new bank account, selling or buying real estate, submitting your income tax returns*, etc.
If you wish to make any investments in the country, having a PAN card is essential. A PAN card is a unique identification document of the investor that enables the government to keep a check and monitor the financial activities of the investor. Thus, the government can retrieve investment details from the PAN card.
Read on for more information about the necessity of a PAN card for investment.
Requirement of a PAN Card for Making an Investment
The PAN is necessary for the following reasons:
To Open an Investing Account
For opening any type of investment account like a Demat Account or a Mutual Fund Account, you need a PAN card. You cannot open a Demat Account without a PAN card. Thus, if you plan on investing in shares or mutual funds2, you need a PAN card.
Tax-Related Requirement
At the time of filing your tax returns, you need to have a PAN card. The revenue generated from any investment is taxed on the person who has made the investment. Therefore, it is important to provide your PAN card details so that the government is able to track the revenue that is being generated through the investments.
Confirmation and Identification
A PAN card is an eligible form of identification, and the identity of an investor may be verified through their PAN card. This ensures that the investor is authorised to make the investment and that there are no fraudulent activities happening in the stock market. Thus, if you were wondering, is a PAN card necessary for the stock market? The answer is yes, it is.
Ensures Hassle-Free Investments
The process of investing is made hassle-free through a PAN card. The KYC (Know Your Customer) process that is required for making an investment in stocks, mutual funds, as well as other finance-related instruments makes use of the data collected through your PAN card, such as your address and name.
What Investments Require a PAN Card?
Here is the list of investments that require a PAN card:
Equity Shares
To buy equity shares from the stock market in India, a PAN card is necessary. In addition to this, while opening an investing account or a Demat account, you need to provide the details of your PAN card. You are not allowed to open a Demat Account without a PAN card.
Mutual Funds
To invest in any type of mutual fund in India, a PAN card is required. You also need a PAN card to complete the KYC process to invest.
Bonds
If you buy any type of bond, including government or corporate bonds, a PAN card is a necessary document.
Derivatives
To buy derivatives (options or futures) from the stock market in India, a PAN card is necessary.
Real Estate
To buy immovable property over a certain threshold price, it is necessary to provide a PAN card. While you get the property registered and pay the stamp duty, you need to provide the details of your PAN card.
Bank Deposits
If you wish to open recurring or fixed deposits in a bank, you need to provide your PAN card details. If the interest that you receive on these deposits is more than a certain amount, the bank is liable to deduct a Tax Deducted at Source (TDS) on the interest. To avoid the TDS, you must provide the details of your PAN card.
Conclusion
These are some of the top investments where you need your PAN card. In India, making an investment without a PAN card is not possible in most cases. Any investment in the stock market, real estate, etc., requires your PAN card details.
Having a PAN card has become a necessity, and you can apply for a PAN card in a few simple steps. If you have applied for a PAN card, check the PAN card status to understand when your PAN card will reach you so that you can begin investing.
