Having a clear answer to the question, “What is a PAN card?” is crucial for all Indian citizens. Simply put, the PAN or Permanent Account Number is a unique 10-digit code used as an identifier. It is alphanumeric, and is issued by the Income Tax Department of India.
The PAN card is a laminated plastic card. It contains your PAN information, which is mentioned on the front of the card, along with other personal details.
The PAN card includes the following details:
Your full name
Your father’s full name
Your date of birth
The PAN is a string of 10 digits which consists of alphabets and numbers. Here’s an example of a PAN: AAAPD1234A. Every entity applying for a PAN card is allotted a unique number, meaning no two Permanent Account Numbers can ever be the same.
The PAN card serves as a crucial document. It is required for several purposes such as filing income tax returns, opening bank accounts, applying for credit cards, investing in mutual funds, buying or selling immovable property, and many other financial transactions.
It is a mandatory document that has become an integral part of the financial landscape in India. Read on to know more and to know what a PAN card is used for.
In India, PAN cards are categorised according to the tax paid by you. The fourth character of the unique code pertains to the category you belong to. Here is a list of these characters and what they represent:
G: Government Agency: This alphabet is used for PAN cards issued to government departments and agencies in India.
J: Artificial Juridical Person: This alphabet is used for PAN cards issued to entities not covered by any other category, such as associations or bodies of individuals not deemed to be a partnership firm or HUF.
P: Individual: This alphabet is used for PAN cards issued to individual taxpayers, which includes residents of India and Indian citizens.
C: Company: This alphabet is used for PAN cards issued to registered companies, which are incorporated businesses with a separate legal entity from their owners.
A: Association of Persons (AOP): This alphabet is used for PAN cards issued to unincorporated entities that are not HUFs or partnership firms.
E: Limited Liability Partnership (LLP): This alphabet is used for PAN cards issued to limited liability partnerships, a type of partnership firm that provides little liability protection to its partners.
B: Body of Individuals (BOI): This alphabet is used for PAN cards issued to unincorporated entities that are not HUFs, partnership firms, or AOPs.
F: Partnership Firm: This alphabet is used for PAN cards issued to partnership firms, which are unincorporated businesses with more than one owner.
T: Trust: This alphabet is used for PAN cards issued to registered charitable, religious, and public trusts.
H: Hindu Undivided Family (HUF): This alphabet is used for PAN cards issued to HUFs, the separate legal entity that consists of all persons lineally descended from a common ancestor.
L: Local Authority: This alphabet is used for PAN cards issued to local authorities, such as municipalities or panchayats.
A PAN card is an important identification document for taxpayers in India, serving as a unique identifier. This is usually for financial transactions and tax-related activities. As for the structure of a PAN card and its various details, here’s what you need to know.
Your name: The primary detail on a PAN card is your name. It can be your name as an individual, company, or firm.
Your father’s name: This detail is mentioned beneath your name and applies to you if you are applying as an individual cardholder.
Date of birth: In the case, you applied as an individual, your DOB is mentioned beneath your father’s name. If you applied as a firm/company DOB is replaced by the registration date.
Permanent Account Number: The most critical content on the PAN card. It is a unique 10-digit alphanumeric number that contains information about the entity.
Structure of 10 digits: The first three letters of PAN are alphabetical. The fourth letter represents the category of you as a taxpayer. The fifth letter is the first letter of your surname, and the remaining characters are random.
Your Signature: The last detail on the PAN card is your signature, which acts as proof required for various financial transactions.
Your Photograph: The photograph is present on the lower right-hand side of the PAN Card. It makes it eligible to act as a photo identity proof of yours. In case you apply as a company/firm there is no photograph present on your PAN card.
The Permanent Account Number (PAN) is an essential document if you want to do financial transactions. It is used as proof of identity for you or your company/firm.
Here are some key benefits of having a PAN Card:
Income Tax purposes: A PAN card is mandatory for you if you earn a taxable income in India. It helps the Income Tax Department to track all financial transactions and tax payments.
Opening a bank account: A PAN Card is an essential document for you to open a bank account in India. It serves as proof of identity and helps maintain the banking system's transparency.
Buying/selling immovable property: A PAN Card is required if you want to buy/sell any immovable property, including land and buildings.
Credit/debit card transactions: A PAN Card is mandatory for credit and debit card transactions exceeding a particular limit set by the RBI.
Foreign travel: A PAN Card is mandatory for you if you wish to travel abroad, as it is required for remitting funds abroad, such as education expenses or medical treatment.
Government subsidies: A PAN Card is required to avail of government subsidies such as LPG subsidies or to apply for a loan from any financial institution.
Applying for a loan: A PAN Card is mandatory for you if you want to apply for a loan or a credit card.
Here is the list of entities that can apply for PAN cards through the Income Tax Department.
Every individual whose total income exceeds the basic exemption limit
Charitable trusts required to file returns under section 139(4A) of the Income Tax Act, 1961
Every individual who carries on a business or profession with a turnover, total sales, or gross receipts of more than ₹5 Lakhs in a financial year
Entities that enter into financial transactions that require the PAN to be quoted
Non-Individual resident entities entering into a financial transaction of more than ₹2.5 lakhs in a financial year
Not possessing a Permanent Account Number, especially if you’re one of the entities required to have one, can have dire consequences. So, here’s a quick look at the effects of not having a PAN card.
You won’t be able to enter into any financial transaction where quoting of PAN is mandatory.
The applicable rate of TDS (Tax Deducted at Source) will be much higher at 20% instead of the usual 10%.
You cannot give declarations such as Form 15G or Form 15H for the non-deduction of TDS.
You may be liable for a penalty of up to ₹10,000 under section 272B of the Income Tax Act, 1961.
You cannot purchase any vehicle except a two-wheeler without quoting your Permanent Account Number.
Contrary to popular opinion, you don’t have to visit the website of the Income Tax Department to apply for a PAN card. Instead, you can do it online through the UTI Infrastructure and Technology Services Limited (UTIITSL) website or the National Securities Depository Limited (NSDL).
Alternatively, you can opt for an offline process to complete your PAN card registration. In this case, you must physically visit a UTIITSL or NSDL PAN Service Centre near you. You must fill out and submit the requisite application form and the supporting documents here.
Once you’ve applied for a PAN card, you can track its status from the website using the acknowledgement number provided.
No. The Income Tax Department issues the PAN card, whereas the Unique Identification Authority of India gives the Aadhaar card. So, the PAN is proof that you’re a registered taxpayer. Meanwhile, the Aadhaar acts as proof of your identity and address.
A PAN card contains information such as your name/ your company’s name, your father’s name, your DOB/ registration date, Permanent Account Number (PAN), your category as a taxpayer, your signature and your photograph.
The PAN application form is available online on official websites or you can get it from any PAN service or TIN facilitation centre offline. You can also request that the document be mailed by contacting the PAN service providers.
You need a PAN card for various financial transactions and official purposes. It serves as primary identity proof. It has different uses like filing income tax returns, opening a bank account, buying or selling immovable assets, making investments, and more. It also helps you save on TDS and claim refunds.
You are eligible for a PAN card if you are a citizen of India, a non-resident Indian, or a foreign citizen doing business in India. In addition, HUF, a company, firm, trust, LLP, or association of persons, can apply for a PAN card.
You can choose from three types of PAN card application forms. Form 49A is for Indian citizens, Form 49AA is for foreign citizens, and Form CSF is for individuals and entities who require a change or correction to their existing PAN data.
Yes, it is mandatory to quote PAN on the return of income. Failing to do so may result in a penalty imposed by the Income Tax Department. Moreover, furnishing your PAN card can help you save on TDS, as financial institutions deduct 20% more TDS on earned interest if your PAN isn’t furnished.