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.
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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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