The Permanent Account Number (PAN) card is one of the most crucial identity and tax-related documents in India. Whether you’re opening a bank account, investing in mutual funds, trading stocks, or dealing with cryptocurrency, PAN is often mandatory.
But many people still have questions like:
Is PAN card compulsory for a bank account?
Do I need PAN for mutual funds or stock trading?
What happens if I don’t link PAN with financial transactions?
In this detailed guide about PAN Card & Financial Transactions, we’ll answer all these questions and more, ensuring you stay compliant with tax laws while managing your finances smoothly.
Is PAN Card Mandatory for Bank Accounts?
PAN for Savings & Current Accounts
Yes, PAN is mandatory for opening a bank account in India, as per RBI guidelines. Banks require PAN to track high-value transactions and prevent tax evasion.
However, there are exceptions:
- Small accounts (with limited deposits) can be opened without PAN.
- Form 60 can be submitted if you don’t have a PAN but need to complete a transaction above ₹50,000.
What If You Don’t Provide PAN?
If a PAN is not connected, banks may stop transactions.
Deposits above ₹50,000 without PAN may attract Tax Deducted at Source (TDS) at a higher rate (20% instead of 10%).
👉 Pro Tip: Always connect your bank account to your PAN to prevent needless issues.
PAN Card for Mutual Funds & SIP Investments
Is PAN Required for Mutual Funds?
Yes, SEBI mandates PAN for all mutual fund investments, including:
- Lump-sum investments
- Systematic Investment Plans (SIPs)
- Redeeming mutual fund units
What If You Invest Without PAN?
Mutual fund houses will not process investments without PAN.
If PAN is not updated, redemption proceeds may be withheld.
👉 Pro Tip: Even small SIPs require PAN—ensure your details are updated in your mutual fund folio.
PAN Card for Stock Market & Demat Accounts
PAN for Trading & Demat Accounts
- Mandatory for opening a Demat account.
- Required for buying/selling stocks (equity, derivatives, or commodities).
- Essential for filing capital gains tax (short-term or long-term).
Trading Without PAN?
- Stockbrokers will not allow trading without PAN verification.
- Tax penalties may apply if transactions are not reported correctly.
👉 Pro Tip: If you’re an active trader, ensure your PAN is linked to your trading and Demat accounts for smooth settlements.
PAN Card for Cryptocurrency in India
Is PAN Required for Crypto Transactions?
Yes! Since 2022, Indian crypto exchanges (like WazirX, CoinDCX, Binance) require PAN for:
- Buying/selling crypto
- Deposits/withdrawals above ₹10,000
- Paying 1% TDS on crypto trades
What If You Trade Crypto Without PAN?
Exchanges may freeze withdrawals.
Tax notices can be issued for unreported transactions.
👉 Pro Tip: Always declare crypto profits in ITR—the tax department tracks PAN-linked crypto trades.
PAN Card and TAN: Key Differences
Many people confuse PAN (Permanent Account Number) with TAN (Tax Deduction and Collection Account Number). Here’s how they differ:
| Feature | PAN Card | TAN |
| Purpose | For individuals & tax tracking | For businesses deducting TDS |
| Who Needs It? | All taxpayers | Employers, companies deducting TDS |
| Format | 10-digit alphanumeric (e.g., ABCDE1234F) | 10-digit (e.g., DELB12345C) |
| Mandatory | For Financial transactions, investments | TDS/TCS filings |
👉 Pro Tip: If you’re a freelancer or business owner, you may need both a PAN card and TAN.
PAN Card for High-Value Transactions
When Is PAN Mandatory?
According to income tax regulations, a PAN is necessary for:
- Cash deposits above ₹50,000 in a single day.
- Purchasing goods/services above ₹2 lakh.
- Foreign travel payments above ₹7 lakh.
- Consequences of Not Providing PAN
Higher TDS deductions (up to 20%). - Transactions may be declined.
👉 Pro Tip: Always carry your PAN details for high-value purchases like gold, cars, or property.
How to Update or Correct PAN Details in Financial Accounts
If your PAN details are incorrect or outdated, follow these steps:
For Bank Accounts:
- Visit your bank branch or use net banking.
- Submit a PAN correction request with a copy of your PAN card.
- For Mutual Funds & Demat Accounts:
Contact your AMC (Asset Management Company) or broker. - Submit a PAN update request along with KYC documents.
For Crypto Exchanges:
- Open your exchange account (such as CoinDCX or WazirX) and log in.
- Go to Profile Settings → Update PAN details.
👉 Pro Tip: Always verify PAN updates after submission to avoid future issues.
Common PAN Card Mistakes to Avoid
- Not Linking PAN with Aadhaar (May lead to penalties).
- Using an Old PAN Card (If details like name/DOB are incorrect).
- Not Updating PAN in Financial Accounts (Causes transaction delays).
- Sharing PAN Publicly (Risk of identity theft).
Conclusion: Why PAN is Essential for Financial Transactions
Whether you’re opening a bank account, investing in stocks, trading crypto, or buying high-value items, your PAN card is a must. Non-compliance can lead to higher TDS, frozen transactions, or even legal notices.
Key Takeaways:
✅ PAN is mandatory for bank accounts, mutual funds, and stock trading.
✅ Cryptocurrency exchanges require PAN for trades above ₹10,000.
✅ TAN is different from PAN—used only for TDS/TCS filings.
✅ Always update PAN details in financial accounts to avoid issues.
By keeping your PAN updated and linked correctly, you can ensure smooth financial transactions while staying tax-compliant.
Also Read: How to apply new PAN card with QR code
FAQs
Q1. Can I open a bank account without PAN?
Yes, but only for small accounts with limited transactions. For full KYC, PAN is mandatory.
Q2. Is PAN required for SIP investments?
Yes, PAN is required for all investments in mutual funds, including SIPs.
Q3. What happens if I trade crypto without PAN?
Exchanges may block withdrawals, and you could face tax penalties.
Q4. How do I update my PAN in my Demat account?
Contact your stockbroker or depository participant (NSDL/CDSL) with a PAN update request.
Q5. Is PAN needed for FD (Fixed Deposit)?
Yes, for FDs above ₹50,000, PAN is required to avoid higher TDS.
This guide covers everything you need to know about PAN card and financial transactions in India. If you have more questions, drop them in the comments!
Disclaimer:
The information provided in this article is for general guidance only and should not be considered legal, financial, or tax advice. PAN card rules and financial regulations may change, so always check the latest guidelines from official sources like the Income Tax Department, RBI, or SEBI before making decisions.
While we strive for accuracy, we do not guarantee that all details are up-to-date or error-free. For personalized advice, consult a CA, tax expert, or financial advisor based on your specific situation.
📌 Pro Tip: Bookmark this page for quick reference on PAN-related financial rules!
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