Last updated on October 5th, 2017 at 01:16 pm
The full form of PAN is Permanent Account Number. It is an official document. A PAN Card is a 10 digit alpha-numeric permanent number that is issued by the Income Tax Department under the Indian Income Tax Act, 1961 under the Supervision of the Central Board for Direct Taxes (CBDT). It is a unique identification number which performs as an identity proof. The card comes in a laminated form.
The PAN card is accepted as a Proof of Indian Citizenship. The PAN number is an important document and it is mainly important to carrying out the financial transactions and related activities. Some of them can be opening a bank account, receiving a taxable salary, sales, and purchases of the goods etc. The PAN Number holds the details of the citizen in a unique way.
Structure of a PAN Card
The PAN Card has 10 characters in the card which is classified into 5 parts. The first five characters are represented in alphabets whereas, the next four digits are numbers and the last number is again an alphabet. All these digits have to mean and are connected and denote the information about the account holder. Below mentioned are the details of the characters that are present in a PAN Card.
- First Three Characters – Here, these are the first three characters which are represented in the alphabet. They follow a particular alphabet series pattern starting from letter AAA to ZZZ. The I.T Department allocates the digits randomly and is a combination of letters like AZT/ ZRT.
- Fourth Character– The fourth character represents the status of the PAN card holder. This is the most character present in the PAN Card. The one who deals with the PAN Card usually checks on this character and gets to know about the status of the account holder. Strangely isn’t? Well, the fourth letter for the majority of the PAN Card Holders is the letter “P” which denotes “Person”. The other nine letter that can represent the fourth character is C, H, F, A, T, B, L, J, and G.
These letters stand for the following status
- C- Company
- H- Hindu Undivided Family
- F- Firm
- A- Association of Persons
- T- Trust
- B- Body of Individuals
- L- Local Authority
- J- Artificial Judicial Person
- G- Government
- Fifth Character– The fifth character represents the first alphabet of the PAN Holder’s last name or the surname.For example- A Pan Holder, Anil Grover, the “G” alphabet represents the fifth character of the PAN Card as his last name’s first alphabet is G. However, If after marriage your surname is changed, then the details on the PAN Card will remain unchanged.
- Sixth to Ninth Characters– These four characters are the sequential numbers starting from 0001 to 9999. Like the first three characters, the selection here is also random.
- Tenth Character– The tenth character in the PAN Card is an alphabet check digit which is the result of the calculation based on a formula that comprises all the nine characters.
With the help of this unique number (PAN Number), the Income Tax Department can link all the financial transactions of the person with the department. These transactions include tax payments, tax deducted at source, tax collected at the source, returns of income/wealth/gift and other specified transactions.
Therefore, we can say that the PAN Card number acts as a unique identification key to track financial transactions related to the taxable components prevent from tax evasion. The PAN Number remains unchanged even if you change your address anywhere in India.
Eligibility For a PAN Card and the Documents Required
There are different eligibility criteria and documents who wish to own a PAN Card. The basic criteria are as follows:
- Individuals– The applicant should be a citizen of India with a valid address Date of Birth and ID Proof. The ID Proof can be Aadhaar card, Voter ID Card etc.
- Hindu Undivided Family– In this case, the head of the family can issue for a PAN Card on the behalf of the family. The head of the family should provide a valid Identity Proof.
- Minors– The guardians/parents of the minors can apply for a PAN Card on the behalf of the minor by providing a valid ID Proof and valid ID.
- NRIs, OCIs, and POIs– If an applicant is an NRI, OCI or POI that is if an Indian citizen resides outside India can also apply for a Passport. He/she should provide a copy of his/her bank account statement in the present country as its address proof.
- Mentally Challenged Individuals– If an individual is mentally challenged then a representative can apply on the behalf of his/her. The representative will have to provide the following details of the applicant- (ID Proof, Address proof, and date of birth) along with his/her representative details.
- Companies– Companies which require PAN Card should register themselves with the registrar of the company and along with that, they must provide a copy of the registrar certificate.
- Partnership Firms/ Limited Liability Partnerships– This category of entities must be registered with the Government and must submit a copy of the registration certificate.
- Trusts– Trusts which are registered can apply for a PAN by submitting a copy of their trust deed or the registration certificate.
- Associations and Local Authorities– This set of people can apply for the PAN by just submitting the agreement or the registration certificate.
- Artificial Jurisdiction Person– This sorts of entities can apply for a PAN by submitting their ID Proof and address either in the form of Government documents or registration certificates.
- Entities with no office in India– Firms, companies, Artificial Jurisdiction in India etc with no office in India can apply for a PAN Card by submitting their valid ID Proof and address. These can either be a registration certificate from which country you stay attested by the Indian Embassy or the Consultant of the country. If this option is not possible then the applicant get a registration certificate in India with approval documents from relevant authorities.
Validity of a PAN Card
If you have applied for a PAN Card in India, then its validity is for the life time. It remains unchanged even if you change your residence address, get married or shift to a place due to employment or job transfer.
How and Where Can You Apply For a PAN Number?
You can apply for a PAN online as well as offline. For applying PAN offline you need to download Form 49A or Form 49AA.
Form 49A– It is an application form for the allotment of the Permanent Account Number in case of an Indian Citizen/India.
Form 49AA– Whereas, Form 49AA is the application form for the allotment of Permanent Accountant Number for Foreign residents and entities.
You can download this form at the official website of Income Tax Department or National Securities Depository Limited (NSDL). You can also find the location of the PAN Offices in any city. Photocopy of identity proof and address proof is also required and payment is done via Cash, Cheque, and DD if in case you are applying it Offline.
If you are applying it online then visit the official website of Income Tax Department or NSDL and can make payments via net banking, credit card, debit card etc. And you can even track your application form online.
Where Can You Use A PAN Card
- It is necessary to show a PAN Card while buying or selling immovable objects.
- When you are buying automobiles, you require a PAN Card.
- Buying banker’s draft, pay orders and checks requires a PAN Card.
- When you buy shares or debentures exceeding 1Lacs then you need to show your PAN Card.
- PAN Card is necessary when making deposits more than Rs 50,000.
- PAN Card is also required for creating a bank account, applying for a credit card purpose.
- Finally, you can produce your PAN Card as a valid photo ID proof.
Benefits of Having A PAN Card
The Benefits that you can enjoy for having a PAN Card are:
- The PAN Card carries your name, address, and date of Birth. Hence it serves as a National Accepted Proof of Identity.
- With a valid PAN Card, you can perform an unlimited financial transaction. You can connect to a landline as well as cell phone connection, buy and sell properties.
- If You are an NRI, then you can easily buy a property and own a business in Inda with the help of your PAN Card. You don’t need to file an ITR for that.
Need for a PAN Number
The PAN Number is a highly used and demand identification number. It is also used for the payment of direct taxes. It is also required for filing an Income Tax Return and to avoid deduction of taxes due to the due date.
Thus, we found out that there are a lot of uses of a PAN Card. PAN Card has quite a lot of advantages. PAN Card also carry transactions which are the normal and high amount. So you should make no delay to apply for a PAN Card.
Applications of a PAN Card
There are various sectors where the PAN Card is needed. These are the following different sectors where your PAN Card is a must needed.
- ITR Filing: This is the hottest of the news which is being discussed these days. It is the Income Tax Rate Filing. Here all the individuals and the entities who are eligible for the Income Tax are requested to file an ITR. While filing for an ITR, PAN card is a must require.
- Opening A Bank Account: Existence of PAN Card number is a must while opening a bank account. Whether it is a savings account or a current account. All the banks, be it public, private or co-operative bank submission of a PAN Card is a must.
- Buying or Selling A Vehicle: If you are planning to buy or sell a motor vehicle whose worth is more than Rs 5,00,000 then you need to show your PAN Card while conducting the transaction.
- Applying for a Credit or a Debit Card: When you are applying for a Debit Card or Credit card at any bank or any financial institution then you need to provide your PAN Card as it is mandatory.
- While Making An Investment: If you are planning to make an investment then you need to provide your PAN Card details for any transactions amounting above Rs 50,000.
- Proof of Identity: The PAN Card is used as a valid proof of identity, as well as Proof of address, proof of age, and proof of identity while making an application for Passport, Driving License, Electricity Connection etc.
- Foreign Exchange: If you are planning to travel abroad and you need to change your currency for that. In that case, you need to furnish your PAN Card details at the money exchange bureau/bank/financial institution.
- Insurance Payments: As per the Income Tax Department Norms, you need to submit the PAN Card details if you are making the transactions of insurance above Rs 50,000.
- Telephone Connections: If you are planning to take a new mobile connection then it is mandatory to submit the PAN Card details as the private cellular operators will not provide you a connection without it.
- Property: If you are planning to buy or sell a property in India, you require PAN Card for it. In case of buying a property the PAN details of the buyer as well as the seller must submit their PAN Card proof.
- Other fields of applications are; Cash Deposits, Fixed Deposits, Purchase of Jewelry etc.
Income Tax department has made it compulsory to link PAN with Aadhaar, setting 31st Dec 2017 as the deadline for same. This step has been taken to remove the usage of Multiple PAN Cards by a single Tax Payer. Usage of Multiple PAN Cards helps a tax payer in Tax avoidance. To know more about How to Link your PAN with Aadhaar Please Click here.