Why is a PAN Card Necessary for Applying for a Credit Card?

From letting you borrow money for your day-to-day expenses to helping you handle unplanned expenses and emergencies stress-free, a credit card offers many benefits. Due to its many financial benefits, the demand for credit cards is rising day by day, urging all banks and financial institutions to offer unique features and benefits to attract more credit card holders. However, the application for a credit card requires a set of documents for verification purposes, one of which is a PAN Card.

Table of Content

• Understanding PAN Card
• Why PAN Card Necessary for Credit Card Applications?
• Benefits of Having a PAN Card

A PAN (Permanent Account Number) card is a crucial document for individuals in India, especially when it comes to applying for a credit card. But why? Here is a brief look at why is pan card mandatory for applying for a credit card, outlining its significance, benefits, and the role it plays in the financial ecosystem:

Understanding PAN Card

The PAN card is a unique ten-digit alphanumeric identifier issued by the Income Tax Department of India. It is linked to all financial transactions an individual undertakes, including receiving salaries, selling or purchasing assets, and paying taxes. Primarily, a PAN card is used for tracking financial transactions and preventing tax evasion. It serves as a crucial tool for the government to monitor the flow of money and ensure compliance with tax laws.

To apply for a PAN card online, one needs to simply visit the official website of TIN-NSDL, go to the PAN Card section, and fill out the online application form. Some of the documents you may require while applying for a PAN card online include proof of identity, address proof, and date of birth proof.

Why PAN Card Necessary for Credit Card Applications?

Here are some reasons that make a PAN card a necessary document for credit card applications:

Verification of Identity

One of the foremost reasons why a PAN card is necessary when applying for a credit card is identity verification. Financial institutions need to ensure that the applicant is who they claim to be. The PAN card, being a government-issued document with a unique identifier, serves as a reliable proof of identity. This helps banks and credit card issuers mitigate the risk of identity theft and fraud.

Track Financial Dealings

The PAN card plays a significant role in tracking an individual's financial transactions. By taking PAN numbers in credit card applications, banks and financial institutions ensure that all high-value transactions made using the credit card are linked to the cardholder’s PAN, enabling the government to monitor and ensure compliance with tax laws. Additionally, the PAN helps avoid money laundering and fraudulent activities by providing a unique identifier for each cardholder.

Suggested Read: Mistakes to Avoid on PAN Card Application

Benefits of Having a PAN Card

Besides helping you in getting a credit card, there are many other benefits of having a PAN Card, including:

IT Return Filing

A PAN card is mandatory for filing income tax returns in India. Without a PAN card, individuals cannot submit their tax returns, which can lead to penalties and legal issues.

Tax Deductions

A PAN card can be used for saving tax deductions, for instance, if an entity or individual has not linked their PAN card with their bank accounts and has annual earnings on savings of more than 10,000 INR, the bank would deduct 30% TDS instead of 10%.

Identity Proof

Other than an Aadhar card and voter ID, a PAN card serves as valid identity proof. It is accepted by various government and non-government agencies, making it a versatile document that can be used in multiple scenarios beyond just financial transactions.

Claiming Income Tax Refunds

If an individual has overpaid their taxes or is eligible for a refund, they can claim it by providing their PAN card details. The refund is directly credited to the bank account linked to the PAN card.

Starting a Business

If you are someone looking to start a business in India, then a PAN card is a must. It can help your business obtain a Tax Registration Number (TRN), which is quite crucial to start a business.

Overall, the necessity of a PAN Card in applying for a credit card cannot be overstated. From verifying identity and tracking financial transactions to ensuring compliance with tax laws and preventing money laundering, the PAN card plays a multifaceted role. By understanding why PAN cards are mandatory, individuals can better navigate the financial system and make informed decisions about their finances. 

Suggested Read: Stay Updated: Recent Changes in PAN Card Rules Explained

If you are looking for a hassle-free and secure way to get a PAN Card issued, consider Muthoot Finance. We are the most trusted financial services company, offering services in over 6100+ branches nationwide. Visit your nearest Muthoot Finance to apply for a PAN card.