What is Permanent Account Number (PAN)?

PAN or Permanent Account Number is a medium of identifying the various taxpayers in the India. PAN is a unique alphanumeric number of identification which is assigned to citizens of India. The computer based PAN identification system provides unique number of identification to each tax paying entity in India. Via this process, all the information relating to tax about a person is recorded for a single PAN number and works as the main key for information storage.

This information is distributed across the whole country and therefore, no two people can have the similar PAN on tax paying entities. The idea for launching PAN is similar to the idea behind the Social Security Number (SSN) used in the USA. In the USA, SSN is a nine-digit unique number issued to all the citizens of USA, temporary as well as permanent.

The main motive for the creation of Social Security Number is to track people for the purpose of social security. But for taxation procedure also, it has worked as a primary number of identification. The PAN issued to an individual is valid for the entire lifetime of the PAN Card holder. There is no any effect of PAN on the change of address by the holder of the PAN card.

History of PAN in India

Before the introduction of PAN in India, taxpayers are assigned a number known as GIR number. It was a manual system of identifying the tax payers and only unique under a certain assessing officer or inside a ward. At the country level, this number is not unique. Indian government rolled out the PAN concept in 1972 and under section 139A of the Income Tax Act, 1961, it is made statutory.

The assessing officer will allot the GIR number to a tax payer and it contains the information of assessing officer. Another issue with the GIR number is that it not unique. It is unique only in a certain circle or ward and it will results into chances of miscalculations or errors during the assessment of tax.

In 1972, to overcome these issues pan card was introduced at the first time. In beginning it is a voluntarily procedure, but in 1976 it was made essential for all the tax paying individuals. In the beginning allotment of PAN numbers were manually made, and to avoid duplicity, every circle/ward get specific numbers set. Due to various issues, in the year 1995 this series was abandoned.

Despite of these modifications, the first PAN card avatar faced few difficulties as described below.

  • To maintain the records of the allotted PAN numbers, there was no any database. Therefore, very limited information is recorded.
  • To issues the PAN cards, there is no any centralised authority which makes it possible that various centers can allot the similar number to various individuals in the country.
  • The PAN card issued is not permanent as the number modifies depends on the address of the holder.

New Design for PAN Card

For those PAN cards which are issued after 1st January, 2017, the Income Tax Department has made a new format. The modifications done in the latest PAN card have been given below:

On the new PAN card, a QR (Quick Response) code has been printed. It will contain the card holder information. For data verification, this QR code can be used.

Some new sections like date of birth, father’s name of the card holder and name of the card holder have been added.

The location of the card holder signature and PAN have been modified.

PAN Card Types

The Income Tax Department has make it mandatory that all the entities who are paying the tax should possess and register a PAN card. This will apply to foreign firms, NGOs, partnership firms, companies, and individuals. Therefore, PAN cards are issued to companies and individuals.

PAN Card for Companies

The PAN card for a company is same as the individuals. But on the physical PAN card, there is no any photograph. there is no date of birth mentioned. The date of registration of the company is written on it.

PAN Card for Individuals

The PAN card for individuals is useful for linking and keeping the track of all those financial transactions which attracts the tax. The Income Tax Department calculates the total amount taxable on the basis of the data.

PAN Card for foreign citizens in India

All the foreign citizens who wants to carry out their business in India are needs to acquire the PAN. This is also applicable to the residents of India. Form 49AA is the application form for foreigners. All the entities which are eligible to receive PAN as citizens of India, are also eligible for receiving PAN as foreign citizens.

The Income Tax Department determine the taxable amount of the organisation or company which they have to pay via many transactions, all of them require the PAN card quoting.

Why is PAN important?

The PAN card is an essential document for a taxpayer. It is mandatory for receiving the tax refund and filing the Income Tax Returns. A PAN card also works as an identity proof and made essential for doing various personal and business transactions.

Read More: How to File Income Tax Return Online?

Essential Uses of PAN

  • While paying the direct taxes, quoting PAN is necessary.
  • PAN details require to be furnished mandatory for registering a business.
  • During income tax payment, taxpayers require to enter the PAN.
  • Various financial transactions need the PAN details such as:
  • Purchase or sale of immovable property valuing Rupees five lakhs or more
  • Purchase or sale of a vehicle apart from a two-wheeler
  • Payments made for restaurants and hotels more than rupees twenty-five thousand.
  • Payment for travel to different countries. If the total amount is more than rupees twenty-five thousand, then the individual requires to quote her/his pan.
  • Payments in excess of rupees fifty thousand for bank deposits.
  • Purchase bonds by paying amount greater than or equal to rupees fifty thousand.
  • For purchasing the jewellery and bullion, if the payment made is exceeding rupees five lakhs then quoting the PAN information of buyer is essential.
  • For buying the mutual fund schemes.
  • If you buy shares of amount more than rupees fifty thousand.
  • For purchasing an insurance policy of more than rupees fifty thousand, the policyholder needs to give PAN details.
  • To remit money in a foreign country.
  • For transferring the funds from NRE to NRO account, PAN details are needed.

Advantages of PAN Card

  • The PAN Card includes details such as photograph, date of birth and name, it can also be used as an identity proof.
  • To keep a track of your tax payment, PAN Card is the best method. If your tax payment is not verified, then you require to pay tax many times.
  • For every entity, PAN is unique and therefore, misuse of PAN is impossible for tax evasion purpose.
  • To get connections like internet, LPG, telephone and electricity, PAN card is used.
  • PAN is a unique number of identification and assigned to the tax payers. PAN is useful for tracking financial details such as tax payment, debt liability and investments made of an entity, to an individual customer.

Who is allotted a Permanent Account Number?

PAN is allotted to the following categories of people.

According to the section 139A of the Income Tax Act, the following taxpaying entities are needed to have a PAN (Permanent Account Number).

  • Any individual who is liable to pay tax or has paid tax to the Income Tax Department.
  • Any individual who is carrying out a professional practice or business which earns him an annual turnover of rupees five lakhs or more in the previous assessment year.
  • All types of trusts in the India.
  • Exporters and importers who are liable to pay any type of duty charges or tax as per any other law, currently in force or as per the Income Tax Act.
  • All tax paying entities applies for a PAN such as trusts, body of individuals, companies, partnerships, HUFs, and individuals. Other same entities such as krish, firms, judicial persons, and minors furnished the PAN to the Income Tax Department.
  • During the allotment time of PAN to an entity, PAN card is presented to the Income Tax Department. PAN is a unique number of identification. PAN card is basically a physical card containing information like photograph, age and name. Copies of PAN card are submitted by entities for many transactions when needed.

What Happens If I Don’t Have a PAN Card?

  • If you don’t have a PAN card then you require to pay thirty percent tax on your wealth and earnings, as specify by the Income Tax Department of India. This rule applies to all entities, companies and individuals who are eligible for tax including firms and foreign nationals registered outside India.
  • Without a PAN card, you are not able to buy a motor vehicle, purchase immovable property above rupees ten lakhs and open an account in any bank in the India.
  • Without a PAN card, TDS will be charged at businesses at a flat rate of thirty percent. Therefore, businesses are not able to perform a wide variety of activities. Quoting the PAN is not become essential for everything from rendering any kind of professional services and purchasing land in India.

Read More: How to File Income Tax Return with or without Form-16?


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Due Dates

  • Due date for deposit of Tax deducted/collected for the month of April, 2024. However, all sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan

    May 07th ,2024
  • Due date for issue of TDS Certificate for tax deducted under section 194-IA in the month of March, 2024

    May 15th ,2024
  • Due date for issue of TDS Certificate for tax deducted under section 194-IB in the month of March, 2024

    May 15th ,2024
  • Due date for issue of TDS Certificate for tax deducted under section 194M in the month of March, 2024?

    May 15th ,2024
  • Due date for issue of TDS Certificate for tax deducted under section 194S (by specified person) in the month of March, 2024

    May 15th ,2024
  • Due date for furnishing of Form 24G by an office of the Government where TDS/TCS for the month of April, 2024 has been paid without the production of a challan??

    May 15th ,2024