Many people find it hard to understand whether they need a PAN card or an Aadhar card. Just because both cards can be used as the Identification proof, it is easy for people to get confused.
Apart from serving as ID proof, they both are very different from each other. Though, everyone knows that both of them are useful, but which one is more valuable?
To know the difference between a PAN card and Aadhar card first we need to know a little more about both the documents.
What is PAN Card
PAN card is the representation of your Permanent Account Number, PAN is just an abbreviation used to make it easy to speak. This PAN card consists of 10 digits unique number and is issued by the Income Tax Department of India.
People can use a PAN card as their identification proof, though it is not it’s the main function. Primarily, a PAN card is issued to track a taxpayer’s financial transactions particularly those related to the payment of income and other mandatory taxes.
PAN card is not a mandatory document but in case you are engaging in certain types of financial and business transaction, you would need to own a PAN card.
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Not just Indians, but foreigners who want to establish a business in our country also need to have a PAN card. It is a necessary document for people who are running a business in India.
Not just this, but depositing a certain amount (more than 50,000rs), will require a PAN card. The main purpose of a PAN card is to make sure that people will pay their taxes legitimately. It minimizes the tax evasion and tracks all your financial transaction.
Where you need a PAN Card
1. For submitting IT return files:
Individuals who are eligible to pay taxes are required to mention their PAN card details while submitting their IT return files.
2. Tax deduction:
For individuals, who have not linked their PAN card with their bank account and they receive annual interest on their savings more than 10,000. Banks are allowed to deduct 30% of TDS instead of deducting 10%. Owning a PAN card can help you save money while paying taxes.
3. For receiving tax refunds:
Usually, the tax paid by an individual is more than what they are supposed to pay. Though, the excess amount that you pay during tax payment is refundable. You can get an online refund but only if your PAN card is liked to your Bank account.
4. For buying a car:
Buying a new car requires you to own a PAN card. Also in case, you are intending to apply for a car loan, the bank will never take your loan request without a PAN card. Though, it is not required in case you are buying a second-hand car.
Where you need an Aadhar Card?
Unlike the PAN card, the main purpose of an Aadhar card is to serve as the identification documents. It is more like a national identification system, which means only Indians can apply for it. Though this is not the only task of an Aadhar card, it also makes it easy to distribute the welfare services in the society.
From the subsidy you get back from your LPG gar provider is made possible because of the Aadhar card.
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It is consist of a 12 digit unique identification number, which records the biometric data of Indian citizens. It is issued under the Aadhar Act 2016 and serves as a single proof of identification.
With the help of Aadhar card, you can avoid carrying all the other important identification documents. It holds you biometric data that gives you a unique identification number. The government can easily use it to retrieve your information such as your photo, house address, name and your date of birth.
You must have already connected your Aadhar card with your bank and your SIM card. Anyone who belongs to Indian nationality can apply for an aadhar card, but it is not a mandatory document.
Where you need an Aadhar Card
1. For submitting income TAX:
This is not just an advantage of Aadhar card. Instead, it is more sort of combined advantage of both PAN card and Aadhar card. If you have your PAN card and Aadhar card both linked with your account you can easily verify your return file with the help of an Aadhar card.
2. Makes it easy to get a passport:
Yes, with the help of an Aadhar card you can apply and get a passport in just 10 days. Just because this document holds most of your information, it can be used to serve as proof of your nationality and your address.
3. Digital life certificate:
“Jeevan Praman for Pensioners” is an initiative by Department of Electronics and IT. It helps the pensioner to receive a life certificate that will help the pensioners to continue receiving their pension. Without Aadhar card, pensioners have to make physical visits to their bank and Pension Disbursing Agency to avail pension.
4. For the easy disbursement of the Provident Fund:
Your Aadhar card makes sure that your provident fund will disburse straight to your bank account. But, this will only work if you have your Aadhar card linked with your account.
In Conclusion:
Both, the PAN card and Aadhar card, is an important document that every Indian’s should have. Though Aadhar is not mandatory, it will certainly ease your life from carrying multiple identification documents. As a PAN card is more inclined to minimize the Tax evasion.
Businessman and people who do multiple transactions every day will be required to own a PAN card. It all depends on your work.
