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PAN Card

PAN card

PAN Card

What is a PAN card?

PAN stands for Permanent Account Number. It is a 10-digit alphanumeric number assigned to all tax-paying entities mostly in India. A PAN number is one-of-a-kind and is used to identify various types of taxpayers. PAN was launched in 1972

PAN Card is issued by the Income Tax Department, Government of India with help from authorized district-level PAN agencies, UTIITSL (UTI Infrastructure Technology and Services Limited), and Protean eGov Technologies Limited (formerly known as National Securities Depository Limited or NSDL). PAN card is also available in electronic form and is known as e-PAN. A PAN card is valid for a lifetime and the number remains unchanged by a change in address or any other detail. 

How is a PAN card issued?

PAN cards are issued following the PPP (Public Private Partnership) model. This is done to maintain the economy, efficiency, and effectiveness of managing, processing, and issuing PAN applications to everyone.

The PAN system of identification is a computer-based system that assigns a unique identification number to every tax-paying entity. Through this method, all tax-related information for an individual is recorded against a single PAN number. Thus, no two people can have the same PAN number. This is shared across the country and saved in the PAN database as well for future reference.

What does the alphanumeric sequence in a PAN Card mean?

A Permanent Account Number, or PAN, is not a combination of random numbers and alphabets. The structure of PAN is quite noteworthy. Each character of PAN is analyzed below:

First 3 Characters: These characters in PAN are in an alphabetic sequence from AAA to ZZZ. The sequence can be any combination of English alphabets.

4th Character: This character in a PAN stands for the type of taxpayer that the PAN holder is. The categories of taxpayers and their respective alphabets are as follows:

A – Association of Persons

B – Body of Individuals

C – Company

F – Firms

G – Government

H – Hindu Undivided Family

L – Local Authority

J – Artificial Judicial Person

P – Individual

T – Trust’s Association of Persons 

5th Character: This character is the first letter of the PAN card holder’s surname. For Example, if a person’s name is “Rita Banerjee”, the 5th character in her PAN would be “B”.

6th – 9th Characters: These characters in PAN are a number sequence in-between 0001 to 9999.

10th Character: A random English alphabet 

Types of PAN cards

There are different types of PAN based on the type of tax-paying entity. All those entities are as follows:

PAN Card for Indian Citizens: Such PAN cards have the PAN card holder’s name, photo, digital signature, Date of Birth, Father’s Name, an authenticity hologram, QR code, date of issue of the PAN card as well as the Permanent Account Number. 

PAN Card for Indian Companies: Such PAN cards have the name and date of registration of the Company, QR code, the authenticity hologram, and date of issue of PAN as well as the Permanent Account Number. 

PAN for Foreign Citizens

PAN for Foreign Companies

Structure of PAN card

The Income Tax Department (ITD) has introduced a new format for PAN Cards issued after 1 January 2017. The features of the new format of the PAN card are as follows:

  1. A Quick Response (QR) code: This code is used for verification and also carries the details of the PAN card holder.
  2. Additions of new details like PAN card holder’s name, father’s name and Date of Birth. 
  3. The location of the Permanent Account Number and the signature of the cardholder have been changed.
  4. The latest structure of a physical PAN card is as follows:
  1. Name of the PAN card holder
  2. Father’s Name of the PAN card holder
  3. Date of Birth of the PAN card holder
  4. 10-digit PAN number
  5. Digital Signature
  6. Photo of the PAN card holder at the top-left corner.
  7. Logo and Hologram of ITD and the Central Government below the photo.

Who is eligible for a PAN card?

According to Section 139A of the Income Tax Act, the following taxpaying entities are required to have a Permanent Account Number:

  1. Any individual (minor or adult) who has paid tax earlier or has to pay tax to the Income Tax Department. Such cases are decided with the help of tax slabs.
  2. Any individual who has a business or professional practice where the yearly turnover is more than Rs.5 lakh in any year of Assessment.
  3. Importers and exporters are liable to pay tax/duty charges as per the Income Tax Act or as per any prevalent law. 
  4. Trusts, Charitable Organisations, and Associations of Persons.
  5. NRI or Indians who stay abroad or run a business there do need PAN also. 
  6. Foreign citizens or their companies can also apply for PAN. 

Benefits/Advantages of PAN card

Let me highlight the benefits and advantages of owing a PAN card: -

  1. PAN Card is important for taxpayers as it is necessary for all kinds of financial transactions. In other words, PAN goes on to be necessary for many of our monetary transactions especially those above Rs. 50,000. It is also used to track the inflow and outflow of your money. 
  2. PAN Card also serves as Proof of Identity in India. Therefore, it can be used to avail utility connections such as electricity, telephone, LPG, and internet.
  3. An Indian citizen needs to refurnish his PAN card details if he owns/registers a business/company in India or abroad. 
  4. PAN is the best possible way to keep track of your tax payment. 
  5. PAN is unique for every entity. Therefore, its misuse is almost impossible for purposes of tax evasion or other fraudulent means.
  6. Indians can use PAN for e-KYC. e-KYC has a lot of advantages when used and is asked for by most service providers. e-KYC is a paperless process and can be used for verification easily. This saves time and energy and you can easily and securely share the relevant details. The data is transferred with the consent of both parties and thus can’t be tampered with in any way. Lastly, the information shared is authentic. 
  7. You need a PAN card for opening a bank or Demat account; apply for Income Tax Refund and file ITR; buy and sell immovable assets, Insurance and RBI bonds; apply for a loan.
  8. If you don’t own a PAN card and your income is taxable, you need to pay a 30% tax on all your taxable property and income.  
  9. The Income Tax Business Application (ITBA) has introduced a tracking facility for transactions made with PAN for the calculation of tax.