Thursday, April 18, 2024

Permanent Account Number (PAN)

Permanent Account Number or PAN, is a permanent ten-digit alphanumeric number issued by the Income Tax Department. PAN, in the form of a laminated card, acts as an identifier for the person or business entity with the tax department, and the number does not change and remains the same during the lifetime of the PAN Holder. 

This number helps the tax department in easy retrieval of  information of taxpayers, to match with the information relating to their investment, raising loans and other business purpose; collected through internal as well as external for detecting and combating tax evasion and widening of tax base.

What does the PAN Number denote ?

A typical PAN consists of 10 alphanumeric characters. eg : AEZPL6170K

The first three characters ie; "AEZ" in the above PAN are alphabetic series running from AAA to ZZZ. Fourth character of PAN represents the status of the PAN holder ie; "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 ie; "L" represents first character of the PAN holder's last name/ surname. Next four numeric characters ie; "6170" are the sequential running numbers from 0001 to 999. The last character "K" represents the alphabetic check digit.

Is it necessary to have PAN ?

Permanent Account Number is necessary for transactions including tax payments, TDS/ TCS credits, returns of income/ wealth/ gift/ FBT, specific transactions, correspondence etc. 

It is compulsory to quote PAN on return of income, and any other correspondence and challans for any payments due to the Income Tax Department. A penalty of Rs.10,000/- is levied in case of any default. 

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.5,00,000/- or more.

Sale or purchase of a motor vehicle or vehicle, other than two wheeled vehicles and detachable side-car having an extra wheel, attached to the motor vehicle.

PAN has to be mentioned for 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.
A contract of a value exceeding Rs.1,00,000/- for sale or purchase of securities.
For opening a bank account.
Making an application for installation of a telephone connection, including a cellular telephone connection.
Payment to hotels and restaurants against their bills for an amount exceeding Rs.25,000/- at any one time.
Payment in cash for purchase of bank drafts or pay orders or bankerís cheques for an amount aggregating Rs.50,000/- or more during any one day.
Payment in cash in connection with travel to any foreign country of an amount exceeding Rs.25,000/- at any one time.

In short, all existing assesses or taxpayers, and any person who intends to enter into economic or financial transactions where quoting PAN is mandatory, must obtain a PAN. 

Not only tax payers but anyone can apply for, and get a Pan Card. It is not necessary that you should be earning taxable income to apply for PAN. Persons who have agricultural income but do not have any taxable income must file a declaration (Form 61) in respect of transactions where quoting of PAN is mandatory. Recently it has been made compulsory for senior citizens (those who have attained 60 years of age) to take PAN card, even if they do not have any taxable income. Form to be made by an individual who is of the age of sixty-five years or more (Sixty Years from A.Y. 2012-13) claiming certain receipts without deduction of tax.

And if you have a PAN, it is not necessary that you should pay tax or submit income tax returns, if your income doesn't come under the tax limit.

How to apply for PAN?

The Income Tax Department has authorized UTI Investor Service Ltd and National Securities Depository Limited to dispense PAN services from IT PAN Service Centers. 

Form 49A is used as a preliminary application form for applying PAN. This form can be obtained from any IT PAN Service center OR can be downloaded from the website of UTI Investor Services Ltd (UTIISL) Or from the website of National Securities Depository Limited (NSDL) authorized by the Income Tax department. A service charge of Rs. 94/- for Indian Residents and Rs. 744/- for NRI's per PAN application must be paid in cash, or by a demand draft, at any IT PAN Service Center.

Along with this application form, 1) One recent coloured photograph (Stamp Size: 3.5cmX 2.5cm)  2) A proof of  'Identity' or 'address' i.e any one document listed below (in Rule 114) 
3) Designation and code of the concerned Assessing Officer of Income Tax department also submitted along with this application.

The documents that will used for a proof of identity in case of individual applicants, including minor and HUF:

Copy of school leaving certificate from a recognized educational institution.

Depository account/ Credit card/ Bank account

Copy of Electricity Bill/ Telephone Bill

Ration Card/ Voters ID/ Driving License/ Passport

Rent Receipt/ Employer certificate/ Certificate of address signed by a MP/ MLA/ Municipal Councilor or a Gazetted Officer.

The Assessing Officer code may be obtained from the Income Tax Office where you submit your return of income, or with the help of an IT PAN Service Center or jurisdictional Income Tax Office.

Once you have successfully applied for the PAN card, UTIISL will deliver the PAN card by post at the address indicated by you in form 49A.

For enquiries regarding PAN application contact :

The Vice President
IT PAN Processing Centre,
UTI Infrastructure Technology And Services Ltd
Plot No. 3, Sector - 11
CBD_ Belapur, NAVI Mumbai-400 614
Phone No. 022-67931300, Fax No. 022-67931099