Tax ID means an identification number that is issued by the Income Tax department and by which any person can be identified by the assessing officer. The ID Tax has to be quoted in all the documents that are submitted to the income tax department.
Tax ID in India that is allotted by the Income Tax department is called the Permanent Account Number (PAN) and it consists of 10 characters that are alphanumeric in nature. According to the Income Tax Act Section 139A, a person must obtain PAN if his business's total sales are likely to be more than Rs. 500,000. Also, if a person has to file his income tax return, he too needs to obtain a PAN. In order to get a Tax ID in India, a person has to fill up the Form 49A and also has to provide all the correct information.
The various uses of Tax ID are:
- If the Tax ID is stated in all transactions then the Income Tax department can have more control over undisclosed and unregulated transactions.
- If the Tax ID is stated in all transactions then it becomes very easy to locate the officer that would assess the concerned person.
- If the Tax ID is stated in all challans then the credit for taxes payment can be granted quickly to the payer of taxes.
Tax ID has to be quoted in the form that is used to open an account with a bank, in the documents that pertain to the purchase or sale of an automobile, in the application form for the installation of a mobile or telephone connection, and in the challans that are used for the payment of taxes directly. The ID Tax also has to be mentioned in the form that is filled up to file income tax returns, in the documents that pertain to the purchase or sale of property worth more than Rs. 5 lakhs, in all correspondence that occurs with the Income Tax department, in all the documents that pertain to a contract whose value is more than Rs. 10 lakhs for the purchase or sale of securities, and in all the documents that pertain to deposits of more than Rs. 50,000 with any banking company.
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