Is PAN Required for Mutual Fund Investments in India?

Yes, PAN (Permanent Account Number) is mandatory for most mutual fund investments in India. It is an essential part of the KYC (Know Your Customer) process and ensures that all investments are traceable, legal, and compliant with income tax laws. PAN helps in linking and monitoring the investor’s financial transactions under a unified identity.

• PAN as a KYC Requirement

• PAN is mandatory for completing the KYC process before investing in mutual funds.

• Without KYC linked to a valid PAN, mutual fund investments are not permitted.

• All Asset Management Companies (AMCs) are required to verify PAN with SEBI and KRA.

• This rule applies to new investors, existing investors, and even minor accounts.

• Role in Preventing Tax Evasion and Duplication

• PAN helps track all mutual fund transactions under one financial identity.

• It ensures that large or high-value investments are reported to the Income Tax Department.

• It eliminates duplicate or fraudulent folios and prevents money laundering.

• PAN also enables enforcement agencies to monitor suspicious financial flows.

• PAN and Investment Limits

• Even small investments below ₹50,000 per year now require PAN-based KYC compliance.

• For investors using SIPs (Systematic Investment Plans), PAN must be quoted at registration.

• PAN is mandatory for investments through online platforms, brokerages, and banks.

• Joint holders in mutual fund folios must also provide valid PAN details.

• Exceptions to PAN Requirement

• Investments under Pradhan Mantri Jan Dhan Yojana (PMJDY) with relaxed KYC norms may allow limited access.

• PAN exemption is allowed only for Micro Investments (up to ₹50,000 annually) with simplified KYC using Aadhaar.

• However, many fund houses still ask for PAN as a best practice, even in such cases.

• NRIs must also submit PAN for mutual fund investments along with other KYC documents.

• Benefits of PAN-Linked Mutual Fund Investments

• Ensures faster KYC processing and smoother investment onboarding.

• Allows easy tracking and consolidation of all mutual fund holdings.

• Enables use of platforms like CAMS, KFintech, and MF Central for portfolio management.

• Facilitates quick tax reporting, capital gains computation, and refund claims during ITR filing.