written by khatabook | November 9, 2022

Understand Importance Of Permanent Account Number – PAN

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Table of Content


A PAN number is issued by the Income Tax Department in India. It is mandatory for certain transactions like opening a bank account, filing income tax returns, etc. The PAN is unique to each individual and is not transferable. It is permanent and remains valid for the lifetime of the PAN holder. 

The PAN card is issued in the name of the PAN holder and bears his/her photograph, signature and other important details.

The PAN is used for identification purposes and helps link all financial transactions of the PAN holder. This makes it easier for the Income Tax Department to track and monitor an individual's financial activities. 

The PAN is also useful for businesses as it helps them track their customers' financial transactions. This is especially important for businesses that deal with large sums of money. Any Indian citizen or resident can apply for the PAN. Foreign citizens and entities can also apply for a PAN, provided they have a valid passport and visa.

Did You Know? There is no restriction on the applicant's age for PAN Card allocation, either minimum or maximum. It can be granted to any citizen, even children, if the necessary documentation is presented.

What is a PAN Number?

The PAN card was introduced in India in 1972. The main objective of introducing the PAN card was to bring all taxpayers under the purview of a single identification number. The Income Tax Department issued the PAN card and administered it by the Central Board of Direct Taxes (CBDT).

The PAN card is a laminated card with the taxpayer’s name, photograph, and PAN number. The first five characters of the PAN number are alpha-numeric and represent the sequential order in which the PAN card is allotted. The next four characters are numeric and represent the taxpayer’s identification number. The last character is an alphabetic check digit.

The PAN number has to be quoted in all financial transactions where the value of the transaction is more than ₹50,000. PAN should be quoted in selling or purchasing immovable property, vehicles, shares, mutual funds, and life insurance policies.

Also Read: Need a PAN Card for Your Business? Learn How to Apply for Company Pan Card

Features of a PAN Card

The PAN card code is unique to each individual and is divided into five parts:

  • The first three characters are alphabets that represent the PAN holder’s name.
  • A fourth character is a number representing the PAN holder’s date of birth.
  • The fifth character is an alphabet representing the PAN holder’s place of birth.
  • The last five characters are numbers that are randomly generated.

Who Can Obtain A PAN Card?

In India, any person or entity carrying out financial transactions above a certain threshold must obtain a Permanent Account Number (PAN) from the Income Tax Department. It comprises opening a bank account, filing income tax returns, or investing in securities.

Types of PAN cards

The PAN is a confidential number and should not be shared with anyone except the taxpayer's authorized representatives, such as a tax consultant or accountant.

Different types of PAN Cards that are provided

1. Individual PAN

This is issued to Indian citizens earning income from salaries, investments, business, or profession.

2. HUF PAN

This is issued to a Hindu Undivided Family, a joint family business or property.

3. Partnership Firm PAN

This is issued to partnership firms, limited liability partnerships, and other businesses.

4. Company PAN

This is issued to companies registered under the Companies Act.

5. Trust PAN

This is issued to trusts, foundations, and other similar entities.

6. AOP PAN

This is issued to the Association of Persons, Body of Individuals, and other groups.

7. Local Authority PAN

This is issued to municipalities, district boards, and other local bodies.

8. Foreign Company PAN

This is issued to foreign companies operating in India.

Also Read: How To Get A Business License In India?

How to apply for A PAN?

Applying for a PAN is a simple process. Individuals can apply for a PAN online, through a PAN service provider, or by visiting a PAN facilitation centre.

The following documents are required to apply for a PAN:

  • A valid identity proof (such as a passport, Aadhaar card, driving license, etc.)
  • A valid proof of address (such as a utility bill, bank statement, etc.)
  • Two passport-sized photographs
  • The application fee (which is Rs. 93 for Indian citizens and Rs. 864 for foreign citizens)

Once the application is complete, the applicant will receive a 15-digit acknowledgment number. The number can be used to track the status of the PAN application. The PAN will be dispatched to the applicant's address within 15 days from the date of application.

Also Read: 10 Tips for Successful Money Management for A Profitable Business

Conclusion:

In a nutshell, Permanent Account Number, or PAN, is a ten-digit alphanumeric code issued by the Indian Income Tax Department. It serves as a unique identification number for taxpayers in India. The PAN is required to file income tax returns, make tax payments, and do other financial transactions such as opening a bank account or taking out a loan. The PAN is also useful for tracking an individual's financial transactions and can be used to prevent tax evasion and money laundering.
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FAQs

Q: Can I surrender my PAN card and apply for a new one?

Ans:

No, one cannot cancel their PAN application and apply for a new one. Only if an assessee has been inadvertently allotted an additional PAN can they make an application request to surrender/modify the additional one.

Q: What is a PAN number example?

Ans:

PAN has the standard format ABCTY1234D. The first three characters, i.e. 'ABC' in the above number, are part of an alphabetic sequence that runs from AAA to ZZZ. The fourth letter, 'T,' reflects the status of the PAN holder.

Q: Who can block PAN cards?

Ans:

The Income Tax Department is driving to deactivate PAN from income tax assessees who have been given multiple PAN cards. Ideally, an individual is supposed to have only 1 PAN.

Q: Does the PAN card expire?

Ans:

Pan card does not expire as it can be updated in case of damage.

Q: What does a ten digit PAN number mean?

Ans:

PAN is a ten-digit unique alphanumeric number issued by the Income Tax Department. PAN is issued in the form of a laminated plastic card (commonly known as a PAN card). Out of the first five characters, the first three characters represent the alphabetic series running from AAA to ZZZ.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.