Your Permanent Account Number (PAN) is a crucial document for tax purposes, and sharing it with everyone can lead to several problems. While some people argue that sharing PAN can help in opening bank accounts or applying for loans, the potential risks outweigh the benefits. In this article, we will discuss the dangers of sharing your PAN number with everyone and how it can lead to tax evasion and other serious issues.
Don’t let reading hold you back. Watch our video instead
One of the most significant problems with sharing your PAN number is that it can be used for expense dumping. For instance, if someone has access to your PAN number, they can file a TDS return quoting your PAN number, claiming expenses that they did not incur. They can do this to evade taxes on their income. For example, if someone has an income of one crore but wants to avoid paying taxes, they can find someone else and use their PAN number to show that they paid them 90 lakhs in expenses. In reality, they may have paid only a small percentage of that amount, and the remaining amount is being used to evade taxes.
Demo sample of PAN
If you do not file your returns regularly or are not vigilant about checking your tax statements, you may not even realize that someone has used your PAN number for expense dumping. However, when the tax authorities notice any discrepancies in your returns, they will issue a notice to you or the person who has used your PAN number. The tax authorities may hold you accountable for tax evasion and impose heavy fines and penalties. Therefore, it is essential to keep checking your Form 26AS or annual statement regularly to ensure that there are no suspicious transactions or expenses claimed against your PAN card.
Consult CA Arun Tiwari for more info 📞 8080088288 or cs@aktassociates.com
Another common mistake people make is when they receive TDS (Tax Deducted at Source) against their PAN number. Some people assume that if they receive TDS, they are eligible for a tax refund, even if they have not paid any taxes. This is incorrect and can lead to serious consequences. For instance, if someone has given you 50,000 rupees as TDS, you may assume that you can file a return and claim a refund. However, in reality, someone may have dumped expenses on you, and you may end up having to pay heavy taxes instead of receiving a refund.
Conclusion
In conclusion, sharing your PAN card with everyone can lead to serious consequences, and it is essential to be cautious. Always check your Form 26AS regularly and report any suspicious transactions or expenses to the tax authorities immediately. If you have any queries or concerns related to tax notices or demands, it is advisable to seek professional help. Remember that prevention is better than cure, and by being vigilant, you can avoid unnecessary fines and penalties in the future.