The Permanent Account Number (PAN) card was introduced in 1972 by the Indian government to streamline tax administration. Initially designed for identifying taxpayers, it has evolved into a crucial document for financial transactions and official purposes.
Over the years, it has become an essential identification tool, widely used in various sectors for individual and business transactions in India.
While it is required to have PAN card for applying for an IPO, we will see is it mandatory to PAN for IPO application in this article.
Decoding the PAN Card
A Permanent Account Number (PAN) card is a distinctive ten-character alphanumeric code issued by the Income Tax Department of India.
Primarily designed as proof of identity for Indian citizens, especially taxpayers, the PAN card plays a crucial role in monitoring financial transactions.
It is a mandatory requirement for transactions exceeding Rs. 50,000 and is essential for filing income tax returns.
Also Read : What is Flipping in IPO – What are the benefits and risks?
Is Having a PAN Card Necessary for IPO Investment?
Investing in an IPO is a popular choice among individuals looking to diversify their investment portfolios. While having a PAN card is not mandatory for participating in IPOs, it offers significant advantages.
Possessing a PAN card expedites the application process, streamlines investment tracking, and ensures accurate filing of income tax returns.
In the absence of a PAN card, alternative documents like a passport or driver’s license can be used to apply for an Upcoming IPO. However, this may prolong the process, requiring additional documentation.
Why is a PAN Card Essential for IPO Applications?
The necessity of a PAN card in the IPO application process is rooted in its role as an identification document.
The PAN card contains essential information about the applicant, including their name, date of birth, and address.
This information serves as a crucial tool in verifying the applicant’s identity, ensuring that only eligible investors participate. Without a PAN card, the verification process becomes challenging, opening doors to potential fraud.
How to Apply for an IPO Using a PAN Card?
Recent regulatory changes have made it mandatory to possess a PAN card when applying for an IPO. The process involves several steps:
- Company Website Visit: Start by visiting the official website of the company in which you wish to invest. Fill out the application form available on the website.
- Submission of PAN Card Copy: Alongside the application form, submit a copy of your PAN card.
- Payment of Application Fee: Pay the required application fee, which can be done online or offline.
- Confirmation and KYC Submission: Upon payment, you will receive a confirmation email or SMS from the company. Print this confirmation and submit it, along with KYC documents, at designated collection centers.
- Verification and PAN Card Receipt: Once the KYC documents are verified, the company forwards a copy of the application to the National Securities Depository Limited (NSDL). Upon successful verification, you will receive an SMS or email from NSDL confirming the submission of your application. Subsequently, you will be issued a PAN card.
How to Check IPO Allotment Status Online by PAN Number?
Checking the IPO allotment status is a straightforward process:
- SEBI Website Visit: Visit the official website of the Securities and Exchange Board of India (SEBI).
- IPO Allotment Status: Navigate to the ‘Investor Services’ tab and click on the ‘IPO Allotment Status’ link.
- PAN Number Submission: Enter your PAN number in the provided space and click ‘Submit.’
- Status Display: Your IPO allotment status will be displayed on the screen.
Documents Required for PAN Card Application
If you dont have PAN card, it is advisable to get it as soon as possible. To apply for a PAN card, submit the following documents as proof of identity and address:
- Passport
- Birth certificate
- Driver’s license
- Two recent passport-sized photographs
What is the Process of Applying for a PAN Card?
Applying for a PAN card involves the following steps:
- Online Application: Visit the website of the Income Tax Department and fill out the online application form.
- Offline Application: If applying offline, fill out Form 49A, available on the Income Tax Department’s website or at authorized PAN application centers.
- Document Submission: Submit the duly filled form with two photographs, proof of identity, and proof of address.
- Processing and Dispatch: Once the application is received, it undergoes processing, and the PAN card is dispatched to the applicant.
Can a Minor Apply for a PAN Card?
Yes, a minor can apply for a PAN card. The application should include a copy of the minor’s birth certificate, the ID of the parent or guardian, and the latest income tax return of the parent or guardian.
Is PAN Number Required for NRIs to Invest in IPO? If not, what are the Alternate Requirements?
While a PAN number is not mandatory for NRIs to invest in IPOs, they must have a valid passport, an Indian bank account linked to their NRE or NRO account, and proof of residency.
Can an NRI Apply for PAN Card in India?
Yes, NRIs can apply for a PAN card in India by following the specified processes and meeting the required documentation criteria.
Why is PAN Card Necessary for a Company?
For companies, a PAN card is crucial for various reasons:
- Tax Tracking: It helps the government monitor the tax liabilities of the company.
- IPO Profit Taxation: Companies going public must pay taxes on IPO profits.
- Regulatory Compliance: It ensures that companies fulfill their tax obligations and adhere to regulatory norms.
Also Read : How to Apply for an IPO through UPI ID?
Validity of PAN Number
A PAN card is valid for the holder’s lifetime. In the case of a company, the PAN number remains valid throughout the company’s existence.
Conclusion
In conclusion, while not obligatory for IPO participation, holding a PAN card markedly simplifies the application process, aids in identity verification, and ensures precise taxation.
Its inclusion streamlines financial transactions, enhancing efficiency and transparency for investors and regulatory bodies alike.
The PAN card serves as a valuable tool in facilitating seamless and secure interactions within the financial ecosystem, contributing to the overall integrity of the investment and taxation processes.
Frequently Asked Questions (FAQs) about PAN Card for IPO
Q1. Is it mandatory to have a PAN Card for investing in an IPO?
Answer: No, it is not mandatory to have a PAN Card for IPO investments, but having one simplifies the application process and ensures accurate financial tracking.
Q2. Can I apply for an IPO without a PAN Card?
Answer: Yes, you can apply for an IPO without a PAN Card by providing alternative documents such as a passport or driver’s license. However, the process may take longer, and additional documentation may be required.
Q3. Why is a PAN Card necessary for IPO applications?
Answer: A PAN Card is essential for IPO applications as it serves as a key identification document, helping verify the investor’s identity and preventing fraud in the application process.
Q4. How do I check my IPO allotment status online using my PAN Number?
Answer:
- Visit the Securities and Exchange Board of India (SEBI) website.
- Click on the ‘IPO Allotment Status’ link under the ‘Investor Services’ tab.
- Enter your PAN number and click ‘Submit’.
- Your allotment status will be displayed on the screen.
Q5. Can a minor apply for a PAN Card for IPO investments?
Answer: Yes, a minor can apply for a PAN Card. The application should include a copy of the birth certificate, the parent or guardian’s ID, and their latest income tax return.
Q6. Is a PAN Number required for NRIs to invest in IPOs?
Answer: While not mandatory, NRIs need a valid passport, an Indian bank account linked to their NRE or NRO account, and proof of residency for IPO investments.
Q7. Can I print a duplicate PAN Card at home using my PAN Number?
Answer: No, if your PAN Card is lost, you need to apply for a duplicate one through the official application process.
Q8. How many Demat accounts can a person open with one PAN Card?
Answer: According to SEBI regulations, an individual can open multiple Demat accounts, but each account must be linked to a unique PAN Card.
Don’t Miss to Read Below IPO Related Informative Articles:
- What is Market Lot Size and Minimum Order Quantity in IPO?
- 15 Step Guide on How to Analyse an IPO
- What is Face Value in IPO?: How it is Different From Issue Price
- Who are Qualified Institutional Buyers (QIBs)?
- What is Draft Red Herring Prospectus (DRHP) in IPO?
- What Are Pre-IPO Stocks (Unlisted Shares)? Benefits and Risks
- What is an Oversubscribed IPO and Its Effects?
- What is Flipping in IPO? – Explained With an Example
- What is Lock-In Period in IPO? Benefits and Drawbacks
- What are the Difference Between Direct Listing and IPO?
- What Is the IPO Cycle In Stock Market?
- What is Book Building Process in IPO? Fixed Pricing Vs Book Building
- How the IPO Grading Works In India?
- What is Roadshow in IPO and What is its Purpose?
- What is IPO Lot Size and How It is Calculated?