Major Penalty Alert: Possessing Multiple PAN Cards Can Cost You ₹10,000

The Permanent Account Number (PAN) is not just a simple ten-character identifier; it serves as your distinct identity within India's taxation framework. The Income Tax Department utilizes PAN extensively to monitor financial activities, evaluate tax obligations, and ensure adherence to regulations. To uphold the integrity of this framework, there are strict regulations pertaining to the use and possession of PAN, along with penalties for infractions.

In the spirit of enhancing compliance and ensuring data precision, the Income Tax Department has reiterated cautions regarding certain infractions by PAN holders that could lead to a considerable fine of ₹10,000. Are you aware of these hazards? It is essential for every PAN holder to grasp them to sidestep unintended repercussions.

The Major Alert: Possessing Multiple PAN Cards

One of the most commonly identified infractions, and a significant emphasis of recent warnings, is the unlawful act of maintaining or possessing more than one PAN card.

What Causes This Situation?

Taxpayers might inadvertently end up with multiple PANs for various reasons, such as:

• Applying for a new PAN after losing the original one.
• Applying with slightly altered information (for instance, variations in name, different dates of birth) over time.
• Reapplying due to confusion regarding the application procedure.
• Mistakes made by intermediaries during the application process.

Why is This Considered Illegal?

An individual or entity is legally permitted to hold only one PAN. The possession of multiple PANs can complicate tax administration, hampering the department's ability to trace all financial activities and income associated with a single taxpayer. It can also be exploited for tax avoidance or fraudulent purposes.

The Penalty

According to Section 272B of the Income Tax Act, 1961, it is explicitly stated that if someone possesses more than one PAN, the Assessing Officer may instruct that such person pay a fine of ₹10,000.

How to Correct the Issue: Surrendering Duplicate PANs

If you unintentionally possess more than one PAN, it is critical to surrender the duplicate(s) immediately to evade the penalty. The procedure is simple:

• Online: You can begin the process through the official websites of NSDL e-Governance Infrastructure Limited or UTI Infrastructure Technology and Services Limited (UTIITSL). Search for the option related to "Changes or Correction in PAN Data" and choose to surrender duplicate PANs. You will need to indicate the PAN you wish to keep and provide details regarding the duplicate PANs to be surrendered.
• Offline: Submit a physical request in Form 49A for 'Changes or Correction in PAN Data' at a PAN facilitation center. Clearly specify the PAN to be surrendered in the designated section of the form. It is also recommended to send a letter to your relevant Assessing Officer to inform them about the duplicate PANs and the one you intend to retain.

It is vital to finalize the surrender process promptly upon realizing you hold multiple PANs.

Additional Violations Leading to a ₹10,000 Fine under Section 272B

• Neglecting to Obtain PAN: If you are obligated to get a PAN as per the Income Tax Act but do not apply for it. This is applicable to individuals whose income surpasses the basic exemption limit, businesses with a turnover above a specific threshold, and entities engaging in designated financial transactions.
• Neglecting to Quote PAN: Failing to provide your PAN where it is required in specified financial transactions. The Income Tax Rules outline various transactions where it is mandatory to quote PAN (for instance, sale/purchase of immovable property priced above ₹10 Lakh, motor vehicles, time deposits exceeding ₹50,000, opening a bank account, and investing above certain limits in securities or mutual funds).
• Submitting Incorrect PAN: Offering an incorrect PAN in a transaction or document where providing PAN is necessary. This might occur due to an honest mistake or intentionally.

For each of these infractions, Section 272B authorizes the Assessing Officer to levy a penalty of ₹10,000.

Other Related Penalties (Brief Overview)

• Neglecting to acquire TAN or submitting a false TAN: Section 272BB, also carries a penalty of ₹10,000.
• Submitting false information when applying for PAN: Section 277, can result in imprisonment and a fine up to ₹50,000.
• Infractions related to TDS/TCS compliance: Often involve PAN/TAN and can incur distinct penalties under various sections (e.g., Section 271H for incorrect TDS/TCS filings, with penalties starting at ₹10,000).

The Importance of Compliance

Possessing the correct PAN and using it properly is essential for seamless financial activities and avoiding issues with the tax authority. Non-compliance can lead to:

• Transaction Limitations: Numerous financial institutions are required to ensure PAN compliance for certain transactions.
• Processing Delays: Problems related to PAN can hinder the processing of ITR and delay refund disbursement.
• Notices and Scrutiny: Issues concerning PAN frequently result in receiving income tax notices.
• Increased TDS Rates: In several cases, if you do not provide PAN, tax is withheld at a higher rate (usually 20%) rather than the standard rates.

Steps for PAN Holders

Take these warnings earnestly and make sure you are entirely compliant:

• Check Your PAN Status: Confirm that you possess only one PAN card. If you believe you might have a duplicate, check its status on the Income Tax e-filing portal.
• Surrender Extra PANs: If you own more than one PAN, start the surrender process right away.
• Accurately Quote PAN: Always include your correct PAN in all requisite financial transactions and documents.
• Ensure Consistency of Details: Verify that your personal information is consistent across your PAN, Aadhaar, and bank records.
• Remain Informed: Be knowledgeable about the transactions that necessitate mandatory PAN quoting.

By being conscientious and adhering to PAN regulations, you can easily evade the ₹10,000 penalty and maintain a smooth rapport with the Income Tax Department.

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