PAN card is one of the most essential identity documents, and is provided to Indian citizens who are aged over 18 years, with a valid source of income. PAN cards are issued under the provisions of the Income Tax Act, 1961. Section 139A of the Act, along with Rule 114 in the Income Tax Rules, mandates the possession of the Permanent Account Number for Indians above the age of 18, with a valid source of income. The PAN card enables the government to access financial data of individuals as well as corporate entities for tax and related purposes. The Permanent Account Number is a 10-digit alpha-numeric number that is unique to every individual/ business entity.
A large number of tax-paying Indians as well as corporate entities have the problem of multiple PAN cards. This occurrence is either intentional or unintentional (it is unintentional in most cases – several individuals are sometimes not even aware of it).
If you’re thinking of applying for a personal loan, it is crucial to make sure that you don’t have multiple PANs in your name, as having more than one PAN card per entity/individual is an offence. Moreover, your credit application will lead to certain rejection, inviting a spate of other problems as well.
Why do people/entities end up having multiple PAN cards?
If in any case you have two PAN cards, you are liable to face consequences in correspondence with the provisions of the Income Tax Rules. Let’s take a look at some dangers of having two PAN cards:
# Penalties
Under Section 272B of the Income Tax Act, 1961, a penalty will be imposed on individuals or entities who possess dual PAN cards. The penalty is usually Rs 10,000, but can go higher in cases involving tax frauds or tax evasions.
# Prosecution
Having dual PAN cards can also lead to prosecution, usually in the event of tax evasion, money laundering and tax fraud. We’re quite aware that any offence pertaining to taxes and money laundering can attract severe punishment under Indian Tax and Money Laundering Laws.
# Rejection of Loan Applications
If you have dual PAN cards, your approval chances for secured and unsecured credit are essentially eroded. Moreover, banks and lending institutions blacklist entities with multiple PANs, and also report them to tax authorities. So, even if you have a good credit score, your loan applications will face rejection and your case might invite investigation from the Income Tax agency.
How do people end up having dual PAN numbers/cards?
As we mentioned earlier, having more than one PAN number happens either intentionally or unintentionally. In most cases, it happens unintentionally as a result of submitting multiple PAN applications to the tax department.
In cases where the possession of multiple PANs is intentional, it mostly happens because individuals or entities want to evade tax, or apply for credit with a new identity because of a previously bad credit outlook.
Ineligibility for secured and unsecured credit
Individuals or companies in possession of dual PAN cards will automatically become ineligible for credit upon detection of the same. Banks and financial institutions consider possession of dual PAN cards as a fraudulent offence, and will report the same to regulatory agencies.
As such, multiple PAN cards are becoming quite an issue these days with consumers ending up with dual PANs either unintentionally or intentionally.