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Is PAN Card Necessary for Investment?

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.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions


What is the requirement of a PAN card for trading?

A PAN card acts as a KYC document, which is one of the mandatory documents that you need at the time of investment. The KYC compliance process is a legal requirement that verifies the identity of any investor and ensures that the risk of fraud and money laundering is reduced.

Can I make use of some other person’s PAN card to open a Demat Account?

No, you will not be allowed to open a Demat Account in your name with someone else’s PAN card. Instead, you can apply for a PAN card, and after you receive it, you can open a Demat Account.

Can I apply for a PAN card online?

Yes, you can easily apply for a PAN card online. Ensure that you have all the required documents before you start the process of application.

How soon can I get my PAN card to start investing?

About two weeks’ time is needed to process the application and then dispatch the PAN card if the documents that you have provided and the information is accurate. After you receive your PAN card, you can start to invest.

Is a PAN card necessary for the stock market?    

Yes, a PAN card is mandatory for investing in the stock market. Without a PAN card, you will not be allowed to invest in any shares, securities, or other market instruments.

Disclaimers

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • Tax:*  Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
  • 2Market-linked returns are subject to market risks and terms & conditions of the product. The assumed rate of returns or illustrated amount may not be guaranteed and depends on market fluctuations.