PAN is a ten-digit unique alphanumeric number issued by the Income Tax Department. PAN is issued in the form of a laminated plastic card as given below (commonly known as PAN card).
Out of the first five characters, the first three characters represent the alphabetic series running from AAA to ZZZ.
BLGS XXXX D
The fourth character of PAN represents the status of the PAN holder.
“P” stands for Individual
“C” stands for Company
“H” stands for Hindu Undivided Family (HUF)
“A” stands for Association of Persons (AOP)
“B” stands for Body of Individuals (BOI)
“G” stands for Government Agency
“J” stands for Artificial Juridical Person
“L” stands for Local Authority
“E” stands for Limited Liability Partnership
“F” stands for Firm
“T” stands for Trust
Illustrative PAN : BLGPXXXX D
Fifth character of PAN represents the first character of the PAN holder’s last name/surname in case of an individual. In case of non-individual PAN holders fifth character represents the first character of PAN holder’s name.
Illustrative PAN : BLGPSD
Next four characters are sequential numbers running from 0001 to 9999.
Illustrative PAN : BLGPS XXXX
Last character,i.e., the tenth character is an alphabetic check digit.
Utility of PAN
PAN enables the department to identify/ link all transactions of the PAN holder with the department. These transactions include tax payments, TDS/TCS credits, returns of income, specified transactions, correspondence etc, and so on. It facilitates easy retrieval of information of PAN holder and matching of various investments, borrowings and other business activities of PAN holder.
Who has to obtain PAN?
PAN is to be obtained by :
• Every person if his total income or the total income of any other person in respect of which he is assessable during the year exceeds the maximum amount which is not chargeable to tax.
• A charitable trust who is required to furnish return under Section 139(4A)
• Every person who is carrying on any business or profession whose total sale, turnover, or gross receipts are or is likely to exceed five lakh rupees in any year
• Every importer/exporter who is required to obtain Import Export code
• Every person who is entitled to receive any sum/income after deduction of tax at source
• Any person who want to register and deal with Goods and service tax .
Transactions in which quoting of PAN is mandatory
Following are the transactions in which quoting of PAN is mandatory by every person except the Central Government, the State Governments and the Consular Offices:
1) Sale or purchase of a motor vehicle or vehicle other than two wheeled vehicles.
2) Opening an account [other than a time-deposit referred at point No. 12 and a Basic Savings Bank Deposit Account] with a banking company or a co-operative bank.
3) Making an application for issue of a credit or debit card.
4) Opening of a demat account with a depository, participant, custodian of securities or any other person with SEBI
5) Payment in cash of an amount exceeding Rs. 50,000 to a hotel or restaurant against bill at any one time.
6) Payment in cash of an amount exceeding Rs. 50,000 in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time.
7) Payment of an amount exceeding Rs. 50,000 to a Mutual Fund for purchase of its units
8) Payment of an amount exceeding Rs. 50,000 to a company or an institution for acquiring debentures or bonds issued by it.
9) Payment of an amount exceeding Rs. 50,000 to the Reserve Bank of India for acquiring bonds issued by it.
10) Deposits of cash exceeding Rs. 50,000 during any one day with a banking company or a cooperative bank.
10A) Deposits of cash aggregating to more than Rs. 2,50,000 during the period of 09th November 2016 to 30th December 2016 with a banking company, cooperative bank or post office.
11) Payment in cash for an amount exceeding Rs. 50,000 during any one day for purchase of bank drafts or pay orders or banker’s cheques from a banking company or a co-operative bank.
12) A time deposit of amount exceeding Rs. 50,000 or aggregating to more than Rs. 5 lakh during a financial year with –
(i) a banking company or a co-operative bank
(ii) a Post Office;
(iii) a Nidhi referred to in section 406 of the Companies Act, 2013 or
(iv) a non-banking financial company
13) Payment in cash or by way of a bank draft or pay order or banker’s cheque of an amount aggregating to more than Rs. 50,000 in a financial year.for one or more pre-paid payment.
Holding of more than one PAN not allowed
A person cannot hold more than one PAN. A penalty of Rs. 10,000/- is liable to be imposed under section 272B of the Income-tax Act, 1961 for having more than one PAN.
If a person has been allotted more than one PAN then he should immediately surrender the additional PAN card(s).
How to know PAN, if the PAN card is lost and PAN is forgotten?
In such a case, one can know his PAN by using the facility of “Know Your PAN” provided by the Income Tax Department. This facility can be availed of from the website of Income Tax Department -www.incometaxindia.gov.in
A person can know his PAN online by providing his core details like Name, Father’s Name and Date of Birth.
After knowing the PAN you can apply for duplicate PAN card by submitting the “Request For New PAN Card Or/ And Changes Or Correction in PAN Data.
Linking of Aadhar with PAN
Finance Act, 2017 has made it mandatory for taxpayers to quote their Aadhaar no. or enrolment ID of Aadhaar application form in the income tax return filing form w.e.f 1st June 2017.
A new facility has been enabled on the e-Filing website i.e. www.incometaxindiaefiling.gov.in where taxpayers can link their Aadhaar no. with PAN. There is no need to login or be registered on E-filing website. This facility can be used by anyone to link their Aadhaar with PAN.
Penalty for not complying with provisions relating to PAN
Section 272B provides for penalty in case of default by the taxpayer in complying with the provisions relating to PAN, i.e., not obtaining PAN even when he is liable to obtain PAN or knowingly quoting incorrect PAN in any prescribed document or intimating incorrect PAN to the person deducing tax or person collecting tax. Penalty of Rs. 10,000 under section 272B can be levied.