Understanding Your PAN

Permanent Account Number (PAN) is a unique 10 character code issued by the Income Tax Department to identify tax payers or assesses in India. It is Alpha-numeric. PAN is mandatory for all assesses who file returns and for financial transactions where it is necessary to quote the same.

PAN enables the IT Dept. to link transactions like tax payments, TDS/TCS credits, returns of income/wealth/gift/FBT, specified transactions, correspondence, and so on to the person who has been allotted the same. In short it is an identifier for the Tax Dept. and it helps detect any tax evasion by the assesse.

A typical PAN card has the name of the person or establishment and date of birth or incorporation in case of a company. In case of individuals it also has the Father’s name. The PAN in the sample is AAPFA3421J.

  1. The first three letters AAP is the alphabetical series from AAA to ZZZ.

  2. The fourth character denotes the status of the PAN holder. In this case it is ‘F’ which stands for firm.

           Notations are as follows

  • P – Individual

  • F – Firm

  • C – Company

  • H- HUF

  • A – Association of Persons (AOP)

  • T- Trust

  1. The fifth character is the first letter of the PAN holder’s last name or surname in case of individuals and the first letter of the name in case of Non-Individuals.

  2. The next four characters are sequential numbers from 0001 to 9999.

  3. The last letter is an alphabetic check digit.

When is PAN necessary?

It is compulsory for the following transactions

  • Sale or purchase of any immovable property valued at five lakh rupees or more.

  • Sale or purchase of a motor vehicle or vehicle, [the sale or purchase of a motor vehicle or vehicle does not include two wheeled vehicles, inclusive of any detachable side-car having an extra wheel, attached to the motor vehicle]

  • Any fixed deposit more than Rs50, 000 with a banking company

  • Any deposit more than Rs50, 000 with Post Office Savings Bank.

  • Sale or purchase of securities of contract value exceeding Rs1Lakh.

  • 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 amounts greater than Rs.25, 000 at one time.

  • Payment for purchase of bank drafts or pay orders or banker’s cheques exceeding Rs50, 000 on a single day.

  • Cash deposits in a bank more than Rs50, 000 during any one day.

  • Payments exceeding Rs 25,000 for foreign travel at any one time.

  • Making an application for credit card or debit card.

  • Mutual Fund investments of Rs50, 000 or more in a single purchase.

  • Amounts exceeding Rs50, 000 to a company for acquiring its shares.

  • Payment of Rs50, 000 to a company or an institution for acquiring debentures or bonds issued by it.

  • Any payment of Rs50, 000 or more to the Reserve Bank of India.

  • Insurance premiums exceeding Rs50, 000 for a year

How to get the PAN Card?

Pan card can be easily obtained through submission of Prescribed application to authorized agency or through online in NSDL website. The documents required are 2 recent passport size photos, proof of ID – Date of birth and address and the prescribed fee. The PAN card will be received in 10-15 days through registered post.

There are lot of fake PAN cards in circulation which is a major cause of concern. Obtaining multiple PAN cards is a malpractice and a fine of Rs 10,000 is laid on illegal PAN card holders. So, while applying for PAN card, one should be careful not to trust fraud agents who claim to provide PAN card directly in hand. Also only two authorized online websites are available for PAN card issue – NSDL and UTI. Hence refrain from resorting to duplicate websites that promise to issue PAN cards.

Please like & share: