PAN Card - Permanent Account Number (PAN) in India

Permanent Account Number or PAN, as it is commonly called, is a means of identifying various taxpayers in the country. PAN is a unique identification number assigned to Indians, mostly to those who pay tax. The PAN system of identification is a computer-based system that assigns a unique identification number to every Indian tax paying entity. Through this method, all tax related information for a person is recorded against a single PAN number which acts as the primary key for storage of information. This is shared across the country and hence no two people on tax paying entities can have the same PAN.

The idea behind PAN is similar to the Social Security Number or SSN used in the United States. SSN in the US is a unique nine-digit number issued to all citizens of the US, permanent and temporary both. Although, the primary aim of SSN creation was to track individuals for social security purposes, it has now become a primary identification number for taxation processes.

Any PAN issued is valid for the entire lifetime of the PAN holder. This is so majorly because PAN is unaffected by any change of address of the PAN card holder.

Who is allotted a Permanent Account Number?

PAN is allotted to people who fall under any of the following categories.

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

  • Any person who has paid tax or is liable to pay tax to the Income Tax Department
  • Any person who carries out a business or professional practice which earns him an yearly turnover of Rs,5,00,000 or more in the previous year of assessment
  • All kinds of trusts in the country
  • Importers and exporters who are liable to pay any form of tax or duty charges as per the Income Tax Act or as per any other law, currently in force

PAN is supposed to be applied for by all tax paying entities including individuals, HUFs, partnerships, companies, body of individuals, trusts, etc. Also, PAN is furnished by the Income Tax Department for other similar entities like minors, judicial persons, firms, Krish etc. Also.

At the time of allotment of PAN to an entity, PAN card too is furnished by the Income Tax Department. While PAN is a unique identification number, PAN card is a physical card that has your PAN details as well as name, age and photograph. Copies of this card are submitted by entities for various transactions when required.

Why is PAN important?

A PAN card is a document that no taxpayer can do without. Besides being compulsory in order to file your Income Tax returns and to receive a tax refund, a PAN card also serves an accepted proof of identity and has now been made mandatory for a number of transactions of both a business as well as a personal nature. A comprehensive list of the various activities that require a PAN card to complete or authenticate the activity are mentioned below:

Mandatory uses of PAN

  • PAN needs to be quoted while paying direct taxes
  • While registering a business, PAN information needs to be mandatory furnished
  • Taxpayers need to input their PAN when paying income tax
  • A lot of financial transactions require PAN information. Some of these transactions are:
  • Sale or purchase of property (immovable) which is valued at Rs.5 lakh or above
  • Sale or purchase of a vehicle, except a two-wheeler
  • Payments that are made towards hotels and restaurants and which are above Rs.25,000
  • Payments made in connection with travel requirements to other countries. The amount in this case if it exceeds Rs.25,000, then an individual needs to quote his/her PAN
  • Making payments of more than Rs.50,000 towards bank deposits in a bank
  • Acquiring bonds by paying an amount equal to or greater than Rs.50,000
  • Payments made for more than Rs.5 lakhs towards purchase of jewelry and bullion also require PAN information of the purchaser to be furnished
  • Any purchase of mutual fund schemes
  • Any amount greater than Rs. 50,000 used towards purchasing shares
  • Pan information is required for transfer of funds from NRE to NRO account

Structure of PAN

Contents of PAN Card
PAN card is issued with every PAN that is allotted to an entity. There are certain details that are printed on the PAN card. These details are permanent details which are not supposed to change with the passage of time. This helps in unnecessary updating of PAN details and records to change of temporary details like address, contact number etc. Here are the details that are captured in a PAN card issued to an individual taxpayer.

  • Permanent Account Number (Along with built-in status of the assesse and check alphabet)
  • Full name of the PAN card holder
  • Taxpayers need to input their PAN when paying income tax
  • A lot of financial transactions require PAN information. Some of these transactions are:
  • Name of father of PAN card holder
  • Date of Birth
  • Photograph
  • Signature
  • Listed below are the details that a PAN card capturers for entities other than individual
  • Permanent Account Number (Along with built-in status of the assessee and check alphabet)
  • Date of incorporation
  • Pan information is required for transfer of funds from NRE to NRO account

All the information that is listed on the PAN card is first checked against the information furnished by the PAN applicant in form 49A. Address is not printed on the PAN card since it is susceptible to change. Also, for organizations, businesses, HUFs etc. it is impossible to list all information on the PAN card and hence, PAN cards are issued to partners, members or directors of a company, on an individual basis.