One of the integral parts of money is taxes, and the essential part of taxes is earning. So, how does the Income Tax Department (ITD) know about your earnings? The answer is simple: your bank account. And that is why linking your PAN card with your bank account is important.
Let's look at the nitty-gritty of linking a bank account with a PAN card.
The Central Board of Direct Taxes (CBDT) has made it mandatory to link the PAN numbers of individuals and other entities with their savings accounts. This mandate was introduced to transfer your income tax refunds directly to your savings bank account.
The Reserve Bank of India (RBI) has also put certain restrictions on your savings account transactions if your PAN is not available. You must link your bank account with your PAN card to enable them.
On 15 December 2016, the RBI mandated several restrictions on a savings account that has yet to undergo the new KYC norms. As per the restrictions, no transfer or debit services could be availed by account holders who don't have a Permanent Account Number (PAN).
Thus, linking a bank account with a PAN card is important for smooth banking services.
Follow these steps to complete linking your PAN card with your bank account:
Quick and simple, isn't it?
You are required to connect each of your bank accounts individually while completing your KYC process.
No, your PAN card won't be automatically linked to the bank account. You can get your PAN linked with your bank account by contacting your bank or through their website. Linking a PAN card with a bank account is essential because it helps track financial transactions and ensures that the bank account is KYC compliant.
Linking PAN Card with bank account increases transparency and helps the government track transactions, KYC compliance and more. Overall, it allows individuals in filing for income tax. Once your PAN is linked, you can fetch pre-filled information around your account, making tax filing easier. It also helps file for ITR and ensure you weren't charged TDS wrongly.
Yes, it is mandatory for your bank account and PAN to be linked. The Indian government has made this mandatory for transparency and ease during the Income Tax process.
You can check if your PAN card is liked to your account in the following ways:
There is no fee for non-linkage of PAN Card with your bank account. However, failure to link will result in certain limitations, such as being unable to open a fixed deposit account or deposit cash exceeding Rs. 50,000. Furthermore, if the interest earned on your fixed deposit exceeds Rs. 40,000 (exceeding the current 10% limit), a TDS deduction at a rate of 20% will be applicable.