What is PAN Card?


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Permanent Account Number (PAN) is a code that acts as an identification for individuals, families and corporates (Indian and Foreign as well), especially those who pay Income Tax.

It is a unique, 10-character alpha-numeric identifier, issued to all judicial entities identifiable under the Indian Income Tax Act, 1961. The Income Tax PAN code and its linked card are issued under Section 139A of the Income Tax Act. It is issued by the Indian Income Tax Department under the supervision of the Central Board for Direct Taxes (CBDT) and it also serves as an important proof of identification.

The PAN is mandatory for a majority of financial transactions such as opening a bank account, receiving taxable salary or professional fees, sale or purchase of assets above specified limits etc.; especially high-value transactions.

The primary purpose of the PAN is to bring a universal identification to all financial transactions and to prevent tax evasion by keeping track of monetary transactions, especially those of high-net-worth individuals who can impact the economy.

The PAN is unique to each individual and is valid for the lifetime of the holder, throughout India. Since a PAN is linked to an individual, a point worth to mention is that the PAN code is therefore not affected by any change of address.

It is also issued to foreign nationals (such as investors) subject to a valid visa , and hence that PAN is not acceptable as a proof of Indian citizenship


Structure of a PAN

The PAN code is a 10-character long alpha-numeric unique identifier.

An example of a PAN code number would be in the form of AAAPL1234C.

  • Income Tax PAN card is issued under Section 139A of the Income Tax Act.
  • The PAN structure is as follows: AAAPL1234C: The five (5) first characters are letters, followed by four (4) numerals, and the last (10th) character is a letter.
  • The three (3) first characters of the code are 3 letters forming a sequence of alphabets letters from AAA to ZZZ
  • The fourth (4th) character informs about the holder of the card. Each holder is uniquely defined by a type of holder defined by a letter from the list below:
    • A — Association of Persons (AOP)
    • B — Body of Individuals (BOI)
    • C — Company
    • F — Firm
    • G — Government
    • H — HUF (Hindu Undivided Family)
    • L — Local Authority
    • J — Artificial Juridical Person
    • P — Individual (PROPRIETOR)
    • T — Trust (AOP)
  • The fifth (5th) character of the PAN is the first (1st) character of either:
    • (a) of the surname or last name of the person, in the case of a "Personal" PAN card, where the fourth (4th) character is "P" or
    • (b) of the name of the Entity, Trust, society, or organisation in the case of Company/ HUF/ Firm/ AOP/ Trust/ BOI/ Local Authority/ Artificial Judicial Person/ Govt, where the fourth character is "C","H","F","A","T","B","L","J","G".
  • The last (10th) character is an alphabetic digit used as a check-sum to verify the validity of that current code.

Eligibility for Holding PAN

As per Section 139A (1), the following are required to have a Permanent Account Number

  • All individuals whose total income exceeds the starting point of the Income Tax slabs. This also individuals whose income is chargeable to tax on behalf of others such as the income of the parents which also includes the earnings of the minor’s child, etc.
  • Charitable trusts required to file returns, as per Section 139(4A)
  • Individuals running a business/profession wherein the total sale or income is likely to go beyond Rs. 5 Lakhs.
  • Importer/exporter who needs to obtain Import Export code.
  • Anyone who will receive payments post TDS collection
  • The person who is required to pay excise duties.
  • Anyone who issues invoices under Rule 57AE
  • A person who has a responsibility to pay service tax and his/her agent
  • Persons registered under the Central Sales Tax Act or the general sales tax law of the relevant state or union territory
  • Any individual who wishes to participate in any financial transactions which mandate furnishing of PAN details:

    • A person who is not covered in any of the above categories can also apply for a PAN Card voluntarily.
    • According to Sec 160, a minor, non-resident, court of wards and anyone defined by law as "an idiot or a lunatic", can also apply for a PAN. In such cases, the application has to be made by a Representative Assessee, on the behalf of such applicant.