1. Summary
  2. PAN Card
  3. Purpose of PAN
  4. Importance of getting PAN
  5. PAN Legal Framework


Permanent Account Number abbreviated as PAN may be a distinctive 10-digit character set Number issued by the revenue enhancement Department to Indian taxpayers. The department records all tax-related transactions and knowledge of a private against his distinctive permanent account Number. This enables the tax collector to link all tax-related activities with the department.

PAN primarily acts as info for all individual transactions, like the tax collected at supply (TCS)/tax subtracted at supply (TDS) credits, revenue enhancement payments, come on gift/investments/wealth, etc. Simply put, the PAN allows the tax department to spot an individual’s tax-related dealings.

PAN Card

The tax department has problems with an individual’s PAN on a physical card brought up because of the PAN card. The PAN card includes info, like the PAN Number, photograph, name, and date of birth of the holder. PAN encompasses a typical format of ABCTY1234D. The primary 3 characters, i.e. ‘ABC’ within the higher than Number is an alphabetic series move between aortic aneurysm and ZZZ. The fourth character, i.e. ‘T’, represents the PAN holder’s standing. The alphabet ‘T’ represents Trust, ‘F’ for Firm, ‘H’ for HUF, ‘P’ for Individual, ‘C’ for Company, etc. The fifth character, i.e. ‘Y’, represents the primary alphabet the PAN holder’s name. Ensuing four characters are ordered digits that move between 0001 and 9999. The tenth character, i.e. ‘D’, is an alphabetic check digit that runs from A to Z.

Purpose of PAN

The revenue enhancement Department has mandated the employment of PAN on the come of financial gain on all tax-related transactions. PAN is an integral facet once it involves the pursuit of the transactions a watching the flow and outflow of an individual’s cash. Also, the government has mandated the linking of PAN with Aadhaar. The point in time for linking PAN with Aadhaar is thirty-one March 2020. Within the same line, the minister, within the Union Budget 2020, is projected to instantly allot PAN to people on the premise of their Aadhaar.

Importance of getting PAN

It is necessary to quote PAN on come of financial gain, and all correspondence with any revenue enhancement authority. From one Gregorian calendar month 2005, it’ll be necessary to quote PAN on challans for any payments because of the revenue enhancement Department. It’s conjointly obligatory to quote PAN altogether documents touching on the subsequent monetary transactions:-

  • Sale or purchase of any immobile property valued at 5 large integer rupees or more;
  • Sale or purchase of a motorcar or vehicle
  • A certificate of deposit, extraordinary fifty thousand rupees, with a banking company;
  • A deposit, extraordinary fifty thousand rupees, in an account with Post workplace Savings Bank;
  • A contract of a price extraordinary one large integer rupees purchasable or purchase of securities;
  • Gap a bank account;
  • Creating an application for installation of a phone affiliation (including a wireless telephone connection);
  • Payment to hotels a restaurant against their bills for an quantity extraordinary twenty-five thousand rupees at anybody time;
  • Payment in money for purchase of bank drafts or pay orders or banker’s cheques for a quantity aggregating fifty thousand rupees or a lot of throughout anybody day;
  • Deposit in money aggregating fifty thousand rupees or a lot of with a bank throughout anybody day;
  • Payment in make the most reference to visit any foreign country of a quantity extraordinary twenty-five thousand rupees at anybody time.

PAN Legal Framework

The legal authority for allotment and use of the new series of PAN springs from Section 139A of the Income-tax Act, 1961. This section lays down the framework for PAN, e.g, who is needed to use for PAN, who else will apply for PAN, who can allot PAN, transactions wherever PAN is needed to be quoted, use of PAN in TDS certificates and TDS returns, that one person will have just one PAN and therefore the manner of applying for PAN. The way of applying for PAN is ordered down in Rule 114 of the Income-tax Rules, 1962. This rule, amended in 2003, conjointly specifies the copies of documents needed to be submitted beside the PAN application as proof of identity and address of the PAN soul. Rule 114B lists down the documents within which PAN is needed to be quoted whereas moving into nominal transactions/activities. Persons who don’t have PAN are exempted from quoting PAN on furnishing a declaration in type sixty.  Rule 114C lists the persons to whom section 139A doesn’t apply. These are persons WHO have agricultural financial gain by furnishing declaration in type sixty-one, non-residents, and Central Govt./State Govt. and diplomatic building offices, wherever they’re payers. The penalty of Rs.10,000/- is imposable u/s 272Bfor failure to befit the provisions of section 139A.