What does a PAN mean?

Permanent Account Number (PAN) is the unique 10-character alpha-numeric identifier, issued under section 139A of the Income Tax Act 1961 by the Income Tax Department under the supervision of the Central Board for Direct Taxes (CBDT) and it also serves as an important Proof of Identification.

It was introduced to facilitate linking of various documents, including payment of taxes, assessment etc. relating to an assessee, to facilitate easy retrieval of information for detecting & combating tax evasion and widening of tax base.

It is mandatory to quote PAN on return of income, all correspondence with any income tax authority. [Section 139A (5) (a) and (b)]

It is compulsory to quote PAN in all documents pertaining to financial transactions notified by the Central Board of Direct Taxes from time-to-time. Some such transactions are

  • Opening of Bank Account
  • Sale & Purchase of Securities exceeding Rs.1,00,000/-
  • Sale & Purchase of Immovable Property valued at Rs.5,00,000/- or more
  • Sale & Purchase of Motor Vehicle
  • Payments in cash, of amounts exceeding Rs. 25,000/-to hotels and restaurants or in connection with travel to any foreign country.
  • Making a time deposit exceeding Rs. 50,000/- with a Bank or Post Office or depositing cash of Rs. 50,000/- or more in a Bank
  • Obtaining a Telephone or Cellular Telephone Connection
[Section 139A (5) (c) read with Rule 114B] The application for PAN is to be made in Form 49A along with requisite documents as a Proof of Identity & as a Proof of Address along with requisite fees at any IT Pan Service Centre set up by UTI Investor Services Ltd (UTIISL) or TIN Facilitation centres of National Securities Depository Ltd (NSDL).

Permanent Account Number (PAN), as the name suggests, is a permanent number and does not change during lifetime of PAN holder. Changing the address or city, though, may change the Assessing Officer. Therefore, such changes must be intimated for required correction in PAN databases of the Income Tax department to nearest IT PAN Service Centre or TIN Facilitation Centre in a Form for ‘Request For New PAN Card Or/ And Changes In PAN Data along with requisite proofs and fees.

Application for fresh allotment of PAN, requests for changes or correction in PAN data or request for new PAN card (for an existing PAN) may also be made through Internet.

Obtaining or possessing more than one PAN is against the law, for which penalty of Rs.10,000/- may be imposed.

Structure of PAN

  • The PAN structure is as follows: AAAPL1234C: First five characters are letters, next four numerals, last character letter.
  • The first three letters are sequence of alphabets from AAA to ZZZ
  • The fourth character informs about the type of holder of the card. Each holder is uniquely defined as below:

C — Company

P — Individual

H — HUF (Hindu Undivided Family)

F — Firm

A — Association of Persons (AOP)

T — AOP (Trust)

B — Body of Individuals (BOI)

L — Local Authority

J — Artificial Judicial Person

G — Government

    • The fifth character of the PAN is the first character- (a) of the surname or last name of the person, in the case of a “Personal” PAN card, where the fourth character is “P” or

– (b) of the name of the Entity, Trust, society, or organisation in the case of Company/ HUF/ Firm/ AOP/ BOI/ Local Authority/ Artificial Juridical Person/ Govt, where the fourth character is “C”,”H”,”F”,”A”,”T”,”B”,”L”,”J”,”G”.

  • The last character is an alphabetic check digit
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CA Paras Kenia

CA Paras Kenia

Author is a Practicing Chartered Accountant with a Reputed CA Firm with an experience of more than 7 years. He is an Expert in Direct Taxation and Assessment matters.
CA Paras Kenia

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