Permanent Account Number (PAN)

Structure of PAN:

A PAN is a 10-character alphanumeric code with the following structure:

• First three characters: Alphabetic sequence (AAA to ZZZ).
• Fourth character: Type of entity (e.g., 'P' for individual, 'C' for company, 'H' for HUF, etc.).
• Fifth character: First letter of the PAN holder’s surname or organization name.
• Next four characters: Numeric digits (0001 to 9999).
• Last character: Alphabetic check digit.

For example: ABCDE1234F

Who Needs a PAN?

PAN is mandatory for:

1. Individuals: Earning taxable income in India.
2. Businesses and Companies: For financial transactions and tax filings.
3. Foreign Nationals and Entities: Conducting business or earning income in India.
4. Minors: If they have taxable income or investments in their name.

Uses of PAN:

• Income Tax Filing: Mandatory for filing income tax returns.
• Financial Transactions: Required for transactions like opening a bank account, applying for loans, and investments.
• Purchase of Property or Vehicles: PAN is needed for property transactions above INR 10 lakh and vehicle purchases.
• High-Value Transactions: Required for depositing cash above INR 50,000 or making credit card payments exceeding this limit.
• Business Registration: Essential for GST registration and other regulatory filings.

Benefits of PAN:

• Tax Compliance: Helps in tracking tax payments and preventing tax evasion.
• Financial Transparency: Links high-value financial transactions to the individual or entity.
• Legal Identity Proof: Acts as an identity proof for various financial purposes.
• Ease of Operations: Simplifies tax returns and documentation.

Registration Process for PAN:

1. Online Process:

• Visit the NSDL e-Gov website (https://www.tin-nsdl.com) or the UTIITSL website (https://www.utiitsl.com).
• Select the appropriate application type:
  • Form 49A: For Indian citizens.
  • Form 49AA: For foreign nationals.

2. Fill Out the Application Form:

• Provide necessary details such as:
  • Full name and address.
  • Date of birth.
  • Contact details.
  • Aadhaar number (for Indian residents).
• Choose the category of applicant (e.g., individual, company, HUF, etc.).

3. Submit Supporting Documents:

• Identity Proof (Aadhaar, Passport, Voter ID, Driving License, etc.).
• Address Proof (Utility Bill, Bank Statement, Aadhaar, etc.).
• Date of Birth Proof (Birth Certificate, Passport, etc.).

4. Pay the Application Fee:

• INR 93 (excluding GST) for Indian addresses.
• INR 864 (excluding GST) for foreign addresses.

5. Upload Photograph and Signature (Online):

• Upload a recent passport-size photograph and scanned signature.

6. Verification Process:

• For Aadhaar-linked applications, OTP-based eKYC verification is available.
• Non-Aadhaar applications may require document submission through courier.

7. Receive PAN:

• Once verified, the PAN is issued and sent to the applicant’s address.
• Applicants can download a ePAN (electronic PAN card) through the official portal.

Offline Process:

1. Obtain Form 49A or 49AA from the nearest TIN Facilitation Center or download it from the Income Tax Department website.
2. Fill out the form and attach the required documents.
3. Submit the form to the nearest facilitation center along with the application fee.
4. The PAN card will be dispatched to your registered address upon successful processing.

Common Mistakes to Avoid:

• Providing incorrect personal details.
• Submitting invalid or mismatched documents.
• Not checking the application status regularly.

Penalties for Non-Compliance:

• Non-possession of PAN for mandated financial transactions can result in penalties.
• Quoting an incorrect PAN on transactions or tax filings may attract a fine of INR 10,000.