What Is PAN Card?: Permanent Account Number implies PAN. The PAN card has a ten-digit number that consists of alphabets and numerical, or in ‘alphanumeric’ terms, allotted by the income tax department of India to all the taxpayers and is unique for every individual.
A PAN number is beneficial for the authorities to keep track of the financial activities of a person, as PAN is integral for all forms of payments. A PAN number is allocated to an individual through a laminated card, which is referred to as a PAN card. The PAN card of an individual contains information such as their PAN number, Name, DOB, and address.
PAN is an electronic system via which all the tax-related information for a person/company is recorded under a single PAN number. This acts as the main key for storing information and is shared across the subcontinent. Therefore, no two tax-paying individuals or organisations will have the same PAN.
In this article, we discuss what a PAN card is, what are its uses, the documents required for applying for a PAN card, who is eligible for applying for a PAN card, etc.
What Is A PAN Card?
A Permanent Account Number (PAN) is a way of identifying various taxpayers in the subcontinent. PAN is a 10-digit identification unique alphanumeric number (containing both alphabets and numbers) assigned to Indians, mainly to those who pay tax.
PAN identification system is a computer-based system that assigns a unique identification number to every Indian tax-paying entity. By this method, all the information related to taxes for an individual is recorded under a single PAN number that acts as the main key for the storage of information. This is shared all across the country, and thus no two people on tax-paying entities are going to have the same PAN.
When PAN is allocated to an entity, PAN Card is given by the Income Tax Department of the country. The PAN is a 10-digit number, and the PAN Card is a physical card with one’s PAN number and the name, date of birth (DoB), and photographs. Copies of the PAN card can be submitted as proof of identity or DoB.
One’s PAN Card is valid for their entire lifetime and it is unaffected by any change in their address.
PAN Card Overview
|Name Of The Authority issuing PAN||Income Tax Department, Government of India|
|PAN Customer Care Number||020 – 27218080|
|Initiation of the PAN Card||1972|
|Validity Of a PAN Card||Life Time|
|Cost of PAN Card||Rs. 110|
|Number Of Enrolments||25 crore (approximate)|
Who Should be Applying for PAN?
In short, anyone who files for income tax returns i.e.,
- Anyone making income which is taxable income in India, including the foreign nationals who pay taxes to the Indian government.
- Anyone running a business (be it services, retail, or consultancy) which had total sales, turnover or gross receipt exceeding the amount of Rs 5 lakh in the previous financial year. From 5th December 2018, the Income Tax department of India has made PAN cards compulsory for all entities doing sales worth at least 2.5 lakh during the financial year.
Elaborately speaking, the PAN is Needed for
- For the payment of direct taxes
- For filing income tax returns.
- One has to give the PAN of the Landlord for claiming HRA if rent is more than Rs 1 lakh each year or Rs 8,333 each month. Previously, the limit was Rs. 1,80,000 p.a or Rs. 15,000 each month.
- For avoiding deduction of taxes at a higher rate than due.
To enter into a specific transaction like:
- Sale or purchase of non-movable property valued at Rs 5 lakh or more.
- Purchasing or selling of a vehicle apart from a two-wheeler.
- Payment made to the restaurants or hotels an amount exceeding Rs 25,000 at any single time.
- Payment in cash an amount more than the amount of Rs 25,000 for travelling to any foreign destination.
- Payment of an amount of Rs 50,000 or more made to the Reserve Bank of India or company or institution for acquiring the bonds or debentures or shares.
- Any purchases of mutual funds
- Deposit exceeding the amount of Rs 50,000 with any single banking institution for 24 hours.
- Payment exceeding the amount of Rs 5 lakh for purchase of Gold bullion and jewellery.
Eligibility for PAN Card
According to the clauses mentioned in the Income Tax Act, the residents of India under the following categories are eligible for the PAN Card registration:
- Individuals who are paying tax or who are liable for paying tax to the IT Department of India.
- Self-employed or businessmen professionals who earn an annual turnover of ₹ 5 Lakh or above.
- People carrying on imports or export activities.
- Registered organisations, trusts and associations.
How to Apply for a PAN Card?
PAN Card application can be done online on one of the stated websites:
To get a PAN card, taxpayers can choose to enroll themselves online. A PAN card can be made online by the following steps:
- Visit the official website of NSDL or UTIISL.
- On their website, look for the PAN card form or Form 49 and fill out the needed personal details.
- On filling up the details, upload the necessary documents.
- Pay for the online processing fee, which is ₹ 93.
On completion of the form, the PAN card is sent to the submitted address within 15 days.
You can also choose to apply offline for your PAN card at any of the district-level PAN agencies. Along with this, you can apply for a new PAN, make a correction or change the needed information yourself. You can also request a duplicate PAN or choose to reprint the card if you lose the original one.
For a new PAN card, Indian citizens, as well as NRIs (including NGOs, trusts, companies, partnership firms, local bodies, etc.), have to fill Form 49A. Foreigners and foreign entities have to use Form 49AA. These forms, attached with all the needed PAN documents, have to be submitted to the Income Tax PAN Service Unit.
Once one applies for a duplicate or new PAN or request for correcting/or making changes, one can track the PAN application status through the acknowledgement number provided.
According to the website of NSDL, the entire process for printing and dispatching of the cards takes two weeks or 14 days approximately.
Documents Needed for PAN Card
In order to register for a PAN card, there are specific documents needed, irrespective of whether the application is made online or offline. These include one’s Address or Identity proofs such as their Passport, Voter ID card, Aadhaar Card, or Driving License.
- PAN applications made for companies need a Registration Certificate through the Registrar of the companies along with the Identity and their address proofs.
- PAN application made for Partnership firms: a partnership deed is needed along with identity and address proofs.
- PAN application made for cooperative societies needs a certificate of registration along with their identity and address proofs.
Types of PAN Cards
Types of PAN cards differ on the basis of the taxpayer for whom it is made. Different types of PAN card have been listed as follows:
- PAN Card for the Individual taxpayers
- PAN Card for an organisation or company
- PAN cards for business units or partnership firms
- PAN cards for cooperative societies or trusts
Do’s and Don’ts Of PAN Card Application
- Fill in all the needed details according to the identity and address proof documents that you are provided.
- Get the thumb impression attested by a Magistrate/Notary prior to submitting the form in order to avoid disqualification.
- Write the entire address and provide the exact contact details stated in the form.
- Fill up the application form with capital letters.\
- Do not make any corrections or over-write anywhere in the form.
- Do not use any initials in the first name or the last name columns.
- Don’t apply for a new PAN card in case your old PAN card has been lost/stolen/defaced. Instead, request a duplicate PAN.
Why Does One Need a PAN?
PAN is a unique identification number that enables each tax-paying entity of India with the following:
- Identity Proof
- Address Proof
- Compulsory for Filing Taxes
- Registration of Business
- Financial transactions
- Eligibility for opening and operate Bank Accounts
- Phone Connection
- Gas Connection
- Mutual Funds – PAN is helpful to complete e-KYC for mutual fund investments.
The union budget 2019 has stated that the taxpayers must be using Aadhaar instead of PAN when filing their income tax returns on or after September 1st, 2019. It has been stated in the 2019 union budget that the Income-tax officer are entitled to themselves allot PAN to the taxpayers filing a return along with Aadhaar.
Why Is PAN Essential? – Benefits and Uses of being a PAN Cardholder
PAN Card is vital for taxpayers as it is necessary for all financial transactions and is used for tracking the inflow and outflow of one’s money. It is required to pay income tax, receive tax refunds, and receive communication from the Income Tax Department of the Indian Government.
The 2019 Indian Budget proposed that people who do not have a PAN can use their Aadhaar number for filing returns and for any other purpose where PAN was earlier compulsory. This implies that if you have not to link pan with radar yet, or do not have a PAN but have an Aadhaar, you don’t have to either link PAN and Aadhar numbers or apply for a new PAN. But, the rules about this are still in the process for creation/update/approval.
That being said, PAN continues to be essential for a large number of monetary transactions. PAN Card also serves as identity proof. Stated below are a few of the uses and advantages of holding a PAN.
Uses of PAN Card in Financial Transactions
- PAN has to be quoted when paying direct taxes.
- Taxpayers have to input their PAN when paying for income tax.
- When registering a business, PAN information has to be furnished.
- A lot of financial transactions need PAN information. Few of these transactions are as stated:
- Selling or purchasing of property (immovable) that is valued at Rs.5 lakh or above.
- Selling or purchasing of a vehicle except for any two-wheeler
- Payments made for hotels and restaurants and that are above Rs.25,000
- Payments made for any travel requirements to other destinations. The amount if exceeds Rs.25,000, then one needs to quote your PAN.
- Payments worth more than Rs.50,000 made towards bank deposits.
- Purchase worth Rs.50,000 or more for bonds
- Purchase of shares worth an amount of Rs.50,000 or more
- Purchase of any insurance policies worth Rs.50,000 or more
- Purchase of any mutual fund schemes
- Payments made worth more than Rs.5 lakh towards the purchase of any jewellery and bullion.
- To dispatch money out of the country.
- Transferring of funds from one’s NRE to an NRO account
General Uses/Advantages of Having PAN
- Since one’s PAN card has information like their Name, Age and picture, it could be used as valid identity proof across the country.
- PAN is the possibly best way for keeping track of one’s tax payment. Otherwise, one might be needed to pay it multiple times since their tax payment could not be verified.
- As PAN is unique for every entity, its misuse is almost impossible for purposes such as tax evasion or other devious means.
- PAN Card can be used for availing utility connections like electricity, telephone, LPG, and internet.
Tracking Of PAN Transactions
The Indian government recently revealed a program by which it can track the transactions made via a PAN card for calculating tax. The Income Tax Business Application-Permanent Account Number also referred to as the ITBAN-PAN, will enable the Income Tax Department to track each transaction made when a particular PAN number is quoted.
- All the financial transactions such as acquisitions, mergers, liquidation, and amalgamation of the PAN along with the dissolution information where a particular PAN card has been quoted and can be traced via the software.
- All the existing information regarding PAN and the whole database of the PAN information has also been moved to this software.
What happens if one doesn’t have PAN Card?
If one’s income falls taxable, not having a PAN card would result in:
- A flat 30% tax on one’s earnings and wealth, as specified by the Indian Income Tax Department. This rule applies to individuals, companies and all entities who are eligible for tax, including foreign nationals and firms that are registered outside the country.
- Not being able to buy a motor vehicle, buy any immovable property worth over Rs. 10 lakh, or open any bank account, among other activities.
- Businesses are unable of conducting a large chunk of their financial activities and procurement.
*Please note that these rules might change once the Aadhaar and PAN become interchangeable.
How to Update/Edit PAN Details?
The following steps can update PAN:
- Go to the website of NSDL and select the updated PAN
- Select option “Correction” from the existing PAN data
- A copy of (POI/POA) supporting documents is required.
Do’s and Don’ts When Filling up PAN Updated Form
- The form must be filled by only using capital letters.
- Fill up all the fields that need to be updated.
- A mobile number is mandatory for any updates to be made.
- Fill up the form in English and the local language used during the time of enrolment.
- Ensure the form is filled only with relevant and current details.
- Names should not have salutations such as Mr / Mrs / Ms / Dr.
- Ensure that the full and complete address is filled in for the PAN to be sent off to the address.
- Enter the name clearly with the signature or thumbprints while self-attesting supporting documents
- Attach the relevant documents which support the need to be updated only
- Incorrect information and lack of supporting documents will be causing the application to be rejected.
Lost PAN Card?
Suppose one has lost their PAN card, don’t worry. Apply for the duplicate PAN card either offline or online. Login on to UTIITSL or NSDL website, Fill up the form 49-A for the Indian citizen or Form 49-AA if a foreigner, and make the payment online for any duplicate copy of their PAN card. The PAN is going to be dispatched within 45 days.
How Long is the PAN Card Valid?
The PAN is valid for a lifetime.
Tracking PAN Applications and Transactions
The Income Tax Business Application (ITBA) now has enabled a tracking facility for the transactions made with the PAN for calculating tax purposes.
Structure of PAN Card
PAN card contains information such as identity, age proof and also complies with the guidelines of Know Your Customer (KYC). PAN card details are stated below:
- Cardholder’s name – Individual/ Company
- Cardholder’s father’s name – Applicable for the individual cardholders.
- Date of birth – the cardholder’s birthday in case of a person or date of registration is mentioned in the firm or company.
- PAN Number – It is a ten-letter alpha-numeric number, and each of the characters represents specific information of the cardholder.
- The first three letters – are completely alphabetical and contain three-letter from the alphabet from A to Z.
- The fourth letter – represents the taxpayer’s category. The different entities and their respective characters are stated below:
- A – Persons Association
- B – Body of Individuals
- C – Companies
- F – Firms
- G – Government
- H – Hindu Undivided Families
- L – Local Authorities
- J – Artificial Judicial Individual
- P – Individual
- T – Association of the Persons for a Trust
- The fifth letter – is the first letter of the individual’s surname.
- Remaining letters – remaining characters are random. The first four characters are numbers when the last one is an alphabet.
- Individual’s signature – PAN Card also acts as proof of individuals’ signatures needed for the financial transactions.
- Picture of the individual – PAN acts as a photo identity proof of the individual. In the case of companies and firms, no picture is present on the card.
PAN for the e-KYC (Know Your Customer)
PAN to Aadhaar linking is compulsory for e-KYC and verification of availing services and benefits from the respective service providers. PAN for the e-KYC is a vital service requirement from many service providers and has huge benefits for the end-user and government. Here’s why:
- Paperless- It is a paperless procedure, enabling a service provider to manage documents quickly and efficiently.
- Quick – PAN cardholders can share the information with a service provider within a secure channel within minutes, thus eliminating the long waiting periods, that physical documents would typically need.
- Secure – Information shared between the user and service provider is tamper-proof digital documents sent via secured channels, thus protecting the holder’s information. These documents cannot be copied, neither can they be used without the consent of both the service provider or the PAN cardholder.
- Authorised – Information that is shared by e-KYC contains authenticated data that makes it legal and acceptable for the parties who are involved in the transaction.
- Cost Friendly – Entire system is online and paperless, eliminating the physical movement of information, making it a cost-effective and time-saving process.
PAN Card Forms
To apply for the PAN card, an application form needs to be filled out. There are two kinds of application forms – Form 49A and Form 49AA. Both these forms could be availed through both online and offline modes.
- Form 49A: Indian citizens or entities use form 49A for applying for a PAN card. Minors and students could also apply for PAN using this form.
- Form 49AA: Form 49AA is the application form for PAN, used in the case of foreigners’.
The forms need to be filled up and duly sent to the TIN-NSDL’s office.
Cost for PAN Application
A person is making an online application for their PAN card. This can be done via the NSDL website or the UTITSL portal. The fee of application which is needed for the PAN is as follows:
- For any Indian communication address: Rs.93 (excluding GST)
- For any foreign communication address: Rs.864 (excluding GST)