The PAN card is a unique identifying card with a number for taxpayers in India. The Permanent Account Number – PAN - is actually a number which will identify you to the Income-tax Authority. A computer system assigns the PAN to all Indian tax payers whether you are an individual or a company. All your tax-paying information is stored under your PAN and can be retrieved at any time using this unique number. This PAN is available to every citizen in India. A PAN is allotted to each individual or company and there is no duplication.
The Pan can be compared to the Social Security Number or SSN in the USA. The SSN is allotted to every legal resident of the USA whether citizen or not. It was chiefly used to identify people for social security benefits but today the nine-digit SSN is used in tax processes also.
Your PAN is allotted only once and will not change throughout your life. Even if you change your address your PAN is unaffected.
The PAN card was first launched only in 1972. There was a GIR number allotted by local income tax officers before this. It was valid only within a particular circle and had the income tax assessor’s details also. This was not useful on a national level and caused confusion as the number was not unique.
At first wards and circles were allotted numbers and these numbers were assigned manually till 1995. But this created some confusion.
- There was no national database of complete information of numbers allotted and information was too restricted.
- Pan numbers were not allotted by a centralized system, so there were chances of numbers being repeated.
- PAN numbers would change with the change of address of the taxpayer, leading to confusion.
The PAN became mandatory in 1976.
- Ø You can apply for a PAN card by using the online facilities at the website of the NSDL or you can apply through any of the District level PAN agencies. If you need to apply for a new PAN number or make corrections on your existing PAN card you can do this using the above facilities. Use Form 49 A to submit an application for a new PAN.
- Ø If you lose or misplace a PAN card you can apply for a duplicate, but the form will be different.
- Ø If you are a foreigner or an NRI you can also apply for a PAN, though the procedures and the forms to be filled may be different.
- Ø You can apply for a PAN through the NSDL (National Securities Depository Limited) or through UTIISL (UTI Infrastructure Technology and Services Limited)
- Ø You can apply for a PAN card either online or offline.
- Ø Once you submit an application as one of the above, you can track the status of your PAN application using the acknowledgment number given by NSDL.
- Follow the procedure given below to process the PAN Card application online:
- Go to the TIN NSDL or the UTIISL websites and click on NEW PAN.
- If you are an Indian citizen (which includes NRI, NRE, OCI) click on Form 49A
- Fill in the application with all the details asked like Name, Address, Date of Birth, Gender, and other details.
- Once the application is completely filled, click ‘submit’ and pay the fee for processing.
- Take a print out of the page with your 15-digit acknowledgment number and sign the form.
- Stick a passport size photo on the acknowledgment slip, add proof of identity and proof of address document copies and the Demand Draft (if you are paying by DD)
- Send the above to NSDL within 15 days of submitting the application online.
- You should receive the PAN card at the address mentioned on the application within 15 working days.
- You can either download the application from NSDL or UTIISL websites or get a copy from an NSDL agent.
- Fill in the form carefully and attach the photo, requisite documents for proof of identity, and proof of address.
- Hand over the form at the NSDL office with the processing fee.
- You will receive the PAN Card at the address written on the application within 15 working days.
- Do fill in the name and address as given exactly in the documentary proofs you are attaching.
- Do get your thumb impression attested from a Magistrate or Notary to avoid being disqualified.
- Do give proper contact details and your correct address in the application.
- Do use capital letters when filling up the application.
- Don’t overwrite or make corrections on the application.
- Do expand all initials in your first or last name on the application.
- Don’t apply for a new PAN if your old PAN card is destroyed, lost or stolen, just apply for a duplicate.
Send basic government documents as proof of ID and address proof. The NSDL will check their central database for verification. PAN applications may be rejected for incorrectness or for incompleteness.
Who should use Form 49A?
- Indian citizens
- Partnership firms
- Local bodies
Who Should Use Form 49AA?
- Foreigners paying taxes in India,
- Limited-liability companies,
- Association of Persons,
- Body of Individuals,
- OCI (Overseas citizens of India)
- NRE (NonResident Entity)
Apply with a copy of your passport/OCI/PIO cards along with bank documents for ID and proof of address from your country of residence.
The ITBAN-PAN or Income Tax Business Application – Permanent Account Number allows the Income Tax department to track any transactions made using a PAN number. This way, the government can easily calculate taxes due with minimum delays.
Amalgamations, acquisitions, mergers, and liquidation can easily be tracked through their PAN numbers. Dissolutions are also tracked and information stored by the new software.
All existing database and PAN information have been migrated to the new software.
NSDL and PAN agencies are the authorized to receive and examine PAN Applications. If you need a PAN Card you may apply online through the NSDL website or go to a District-level PAN Agency and obtain and submit an application for PAN.
Allotment of PAN
When you submit Form 49A, the application is scrutinized by assessing officers with the help of the computerized AIS system. After basic verification, the application is forwarded to computer centers for data entry through the IPAN system. From here it can be transferred to the Central Data System in Delhi. The National Computer Center holds the taxpayer database, which is checked for duplication. If there are no other PAN allotments in the same name, the PAN request is received and PAN is given.
Another way to get a PAN number is through an assessing officer. An individual submits the application form 49A through an assessing officer who verifies and then does the data entry. From here it is sent to the National Computer Center for PAN allotment. They send it back to the assessing officer, who does the printing and sending to the applicant.
PAN is allotted on Public Private Partnership (PPP) model to promote efficiency, effectiveness, and economy. The NSDL and UTIITSL (UTI Infrastructure Technology Services Limited) have been contracted to collect, verify and handle personal documents for allotment of PAN.
What Information Does A PAN Card Have?
A PAN card is given for every PAN allotted to anyone or company (or entity). Permanent details of a person or entity which are unlikely to change over a period of time are printed on the PAN card. This way frequent updates of Pan Cards can be avoided.
The PAN Card has the following details:
- The Permanent Account Number of the Individual taxpayer along with the built-in status and check Alphabet.
- The Full Name of the PAN Card Holder
- Name of the Father of the PAN Card Holder
- Date of Birth of the Holder
- Photograph of PAN Card Holder
For Entities other than individuals:
- The Permanent Account Number along with the built-in status of assesse and check Alphabet.
- Full Name
- Date of Incorporation
All the information listed on the PAN Card reflects the verified data given on the application in Form 49A. The address is not written, as it may change from time to time. It is not possible to list all the information about a company, HUF, business, etc so PAN Cards are given in the name of an individual like a director, partner, other members or individual’s names.
The PAN is definitely a unique way to identify a taxpayer.
- The first three characters are a series of alphabets from AAA to ZZZ.
- The fourth character represents what kind of taxpayer you are:
- A — Association of Persons (AOP)
- B — Body of Individuals (BOI)
iii. C — Company
- F — Firm
- G — Government
- H — HUF (Hindu Undivided Family)
vii. L — Local Authority
viii. J — Artificial Judicial Person
- P — Individual
- T — AOP (Trust)
- K — Krish (Trust Krish)
- The Fifth character will be the first letter of your surname (last name) for example if your name is Sonia Mehta, the fifth character will be M.
- The last character
Types of PAN Cards
All taxpayers, either individual or Company, Trust, NGO, Partnerships and foreign firms must have a PAN Card.
What does a Personal PAN Card mean?
If you are a person paying income tax, you must have a PAN Card to keep track of your financial details, and to link your transactions for tax assessment. The Income Tax Department can easily calculate taxes you owe the government.
What does the company or other entity PAN Card mean?
This PAN Card is similar to the individual’s PAN Card. There will not be a photograph or a date of birth on this card. But there will be a date of registration of the company.
PAN Card for Foreigners in India
If you need to do business in India, you must have a PAN and be given a PAN Card. The application process is the same as for the above but Form 49AA must be filled in. All kinds of enterprises which are similar to Indian ones must get a PAN Card for foreign citizens.
Since you must quote your PAN card for all financial dealings, the Income Tax Department can easily calculate the taxes due.
The New PAN Series
The PAN series was rolled out in 1995, as the old one was inadequate and had so many drawbacks as we already discussed earlier.
The new PAN Series has the following advantages:
- It links all past and present tax related information to a single identification number.
- With the launch of the new series, information retrieval became easier.
- All investments, loans, credits, and debits have been linked to individual PANs making it easier to prevent tax fraud or evasion.
Is it Important to Have a PAN?
Every taxpayer should have a PAN to file your income tax returns. You may even need to get a refund on your taxes so you need to have a PAN Card. The PAN Card is now used as an identity document accepted by most. The PAN number is necessary to conduct most business and individual transactions.
Here is a List of Actions that Require a PAN:
- You need a PAN when paying direct taxes.
- If you start a business you need to have a PAN to register it.
- You need a PAN to pay income tax
- If you buy or sell immovable property worth more than Rs. 5 lakhs
- For buying or selling vehicles
- If you pay more than Rs 25,000 at a restaurant or hotel
- If you spend more than Rs. 25,000 on foreign travel
- If you deposit more than Rs. 50,000 in a bank
- If you pay Rs. 50,000 or more to buy bonds
- If you buy more than Rs 5 Lakhs in gold jewelry or bullion
- For all Mutual Funds
- If you buy more than Rs. 50,000 in shares
- If you buy insurance policies for more than Rs. 50,000
- For transferring funds between NRE and NRO accounts.
Uses of the PAN Card
- The PAN Card can be used as proof of ID throughout the country
- It keeps track of tax payments so you don’t end up paying the same taxes again
- Tax evasion is minimized as every individual or company entity must have their own PAN
- PAN Cards can be used as documentary proof to get LPG, internet connection, telephone/mobile, or electricity connections
- PAN can track the financial information right from investments to debts to tax history of everyone
Other Categories Similar to PAN
There are other unique numbering schemes like PAN used for other purposes
- TAN – Tax Deduction and Collection Account Number – this 10 digit number is assigned to individuals or companies that must collect or deduct tax on payments for TDS (Tax Deducted at Source) which will come under the Income Tax Act.
TAN is quoted to apply for a refund of TDS or TCS challans or other certificates. Failure to do so can attract a fine of Rs. 10,000.
- TIN (Taxpayer Identification Number) – This 11 digit number is used by dealers, manufacturers and traders to pay Value Added Tax at the state level. The number is quoted for any invoice, orders or quotations by both seller and buyer businesses.
Taxpayers under the Income Tax Act (1961) are also tracked with this number.
Who is Eligible for a PAN?
Income Tax section 139A says the following people must have a PAN
- Anyone who pays tax or who is legally responsible for paying taxes
- If you have a business or a practice where you have a turnover of Rs. 5,00,000 in the last assessment year.
- If you have a Trust
- If you are in the import or export business and legally responsible for taxes or duties under the Income Tax Act or any other law
When you get a PAN from the Income Tax department, you also receive a PAN Card. The PAN Card is the proof of your PAN allotment and has all the important details as given earlier and you can make copies to submit along with other transactions when required.
If I Don’t Have a PAN Card What Can I do?
If you have taxable income then the following may apply:
- You will have to pay a flat 30% tax on your profits and wealth. This rule is applicable for individuals, companies, foreigners, international firms or anyone or organization which comes under the tax net.
- You cannot buy a car or an immovable property over Rs. 10,00,000 or open a bank account.
- You may not be able to conduct business as PAN is needed for everything from buying land to getting any professional services in India.
Other Utility Documents:
- Aadhar Card
- Gas Connection
- Gas Booking
- Driving License
- Voter ID