PAN and PAN Card
Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department, to any "person" who applies for it or to whom the department allots the number without an application. PAN enables the department to link all transactions of the "person" with the department. These transactions include tax payments, TDS/TCS credits, returns of income/wealth/gift/FBT, specified transactions, correspondence, and so on. PAN, thus, acts as an identifier for the "person" with the tax department. PAN was introduced to facilitates linking of various documents, including payment of taxes, assessment, tax demand, tax arrears etc. relating to an assessee, to facilitate easy retrieval of information and to facilitate matching of information relating to investment, raising of loans and other business activities of taxpayers collected through various sources, both internal as well as external, for detecting and combating tax evasion and widening of tax base.
A typical PAN is ABZPR7190H.
First three characters i.e. "ABZ" in the above PAN are alphabetic series running from AAA to ZZZ
Fourth character of PAN i.e. "P" in the above PAN represents the status of the PAN holder. "P" stands for Individual, "F" stands for Firm, "C" stands for Company, "H" stands for HUF, "A" stands for AOP, "T" stands for TRUST etc.
Fifth character i.e. "R" in the above PAN represents first character of the PAN holder's last name/surname.
Next four characters i.e. "7190" in the above PAN are sequential number running from 0001 to 9999.
Last character i.e. "H" in the above PAN is an alphabetic check digit.
Why is it necessary to have PAN?
It is mandatory to quote PAN on return of income, all correspondence with any income tax authority. From 1 January 2005 it will be mandatory to quote PAN on challans for any payments due to Income Tax Department.
It is also compulsory to quote PAN in all documents pertaining to the following financial transactions :-
- Sale or purchase of any immovable property valued at Rs. 10 lakhs or more
- A time deposit with a bank/Nidhi company/NBFC exceeding Rs. 50,000 or aggregating to more than Rs. 5,00,000 during a financial year
- A time deposit with Post Office exceeding Rs. 50,000
or aggregating to more than Rs. 5,00,000 during a financial year
- A contract of a value exceeding Rs. 1 lakh for sale or purchase of securities
- Sale or purchase, by any person, of shares of a company not listed in a recognised stock exchange of an amount exceeding Rs. 1,00,000 per transaction.
- Payment to hotels and restaurants against their bills for an amount exceeding Rs. 50,000 at any one time
- Payment in cash for purchase of bank draft or pay orders or banker's cheque for an amount Rs. 50,000 or more during any one day
- Deposit in cash aggregating Rs. 50,000 or more during one day with a bank
- Payment in cash in connection with travel to any foreign country of an amount exceeding Rs. 50,000 at any one time
- Payment in cash for purchase of any foreign currency of an amount exceeding Rs. 50,000 at any one time.
- Payment of an amount of Rs. 50,000 or more to a Mutual Fund for purchase of units or to a company for acquiring shares or debentures or bonds issued by it
- Payment of an amount of Rs. 50,000 or more to RBI for acquiring bonds issued by it
- Payment in cash or by way of a bank draft or pay order or banker's cheque of an amount aggregating to more than Rs. 50,000 in a financial year for one or more pre-paid payment instruments issued by RBI to a banking company or a co-operative bank or to any other company or institution.
- Payment of an amount of Rs. 50,000 or more in a year as life insurance premium to an insurer
- Payment for sale or purchase of goods or services of any nature (other than those specified above in Point No. (a)to(n)) of an amount exceeding Rs. 2,00,000 per transaction.
Who has to apply for PAN ?
The following persons should apply for allotment of PAN in Form 49A-
- Every person whose assessable income exceeds the maximum amount which is not chargeable to tax or any person carrying out business or profession whose total sales / turnover is likely to exceed Rs 5,00,000 in a year.
- A person who is required to furnish return under sub-section (4A) of section 139.
- An employer who is required to furnish return of fringe benefits tax.
- The Central Government has power to specify by notification any class or classes of persons by whom tax is payable under the Income-tax Act or any tax or duty is payable under any other law for the time being in force.
Important points to remember while filling 'PAN' form (Form No. 49A)
Please Click Here to download PAN and Tan forms in Excel format and Check the status of your PAN and TAN
The PAN form should be filled in by the assessee with due care and caution. There should be no corrections or overwriting and it should be properly signed and verified by the persons who is authorized to do so, under the provisions of IT Act. The following important points may be taken care of while filling up the form :
- Status : Correct code number of the assessee's status / residential status may be filled in.
- Date of birth : Date of birth is very important and should be filled correctly.
- Father's Name : Father's name has to be given even in case of married ladies.
- Sources of Income : A person should have at least one source of income to apply for
PAN. So the relevant box should be checked in the form.
- In case of companies following additional details have to be filled in the form
VERIFICATION : The verification must be signed by the authorized person, and other particulars viz. Name, Assessment Year, Capacity, Place and Date should be correctly filled therein. Please note that any person making a false statement is liable-to be prosecuted under Section 277 of the Income-Tax Act.
- The ROC registration number of the company.
- The date of incorporation of the company.
- The date of commencement of business by the company.
- In which business activity the company is engaged in.
Who can verify and sign the 'PAN' form ?
Individual : The individual filling his PAN form has to sign it. In case the individual is mentally incapable, then the PAN form may be signed by his Guardian or by any other person competent to sign on his behalf.
Incase the individual is absent from India or because of any other reason, he is not able to sign and verify his PAN form, then any person duly empowered by him through valid Power of Attorney may sign on his behalf. In such case, a certified copy of Power of Attorney must accompany the PAN form.
Hindu Undivided Family : By the Karta or where he is absent from India or he is mentally incapacitated from attending to his affairs, by any other adult member of such family.
Company - Resident : The Managing Director or, where there is no Managing Director or he is not able to sign and verify the PAN form due to any unavoidable reason, by any director thereof.
Company - Non-Resident : The PAN form may be signed and verified by a person holding a valid Power of Attorney from the Non-Resident, which should be attached to the PAN form.
Firm : Managing Partner, or, where there is no Managing Partner or due to some unavoidable reasons, he is not able to sign and verify the PAN form, by any partner thereof, not being a minor.
Local Authority : By the Principal Officer
Association of Persons : By any member of the Association or the Principal Officer thereof.
Where to file PAN form ?
Presently, the Pan application may be submitted at the UTIISL
counters along with the following:
- Two photographs of stamp size in case of Individual.
- Proof of identity and proof of residence & date of Birth
- Payment of fee of Rs. 60/- + Rs. 5/- (application form cost)
The tamper proof high security PAN card will be issued within 15 days from the date of filing of the application.
There is a Tatkal Scheme under which the PAN card will be issued within 2 days on payment of D.D of Rs. 150/- in case of urgency. To know the position of allotment, one may enquire with PAN query centre or PRO in Income Tax Offices. Further, there is a website available - www.incometaxindia.gov.in.
In case of transfer of an assessee from one Region to another, the fact of transfer has to be informed at the old station with a request for transfer of PAN to the present Region.
Frequently Asked Questions
What are the benefits of obtaining a Permanent Account Number (PAN) and PAN Card?
A PAN number has been made compulsory for every transaction with the Income Tax department. It is also mandatory for numerous other financial transactions such as opening of bank accounts, availing institutional financial credits, purchase of high-end consumer item, foreign travel, transaction of immovable properties, dealing in securities etc. A PAN card is a valuable means of photo identification accepted by all government and non-government institutions in the country.
I have lost my PAN card but remember my number. Do I necessarily need to get a fresh card?
With your PAN you can continue to transact with the Income Tax department. However, in respect of other agencies you may encounter constraints without a PAN card since it doubles as a photo identity card.
I have been allotted two PANs. Which number should I use?
You may retain any one of the numbers and surrender the other through a letter addressed to your jurisdictional Assessing Officer.
If I do not surrender the additional PAN number, is there any problem?
Yes. It is illegal to have two PANs and the penalty for such offence is Rs.10,000/-.
By mistake I have been using different PANs for different purpose like one for my demat account and another for filing my Income Tax return and payment of taxes. How do I set this right?
It is advisable to retain only one PAN, preferably the one used for Income Tax purpose and surrender the other number immediately. The institutions where the latter number has been quoted should be informed of the correct PAN.
Is it mandatory to file return of income after getting PAN?
No. Return is to be filed only if you have taxable income.
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