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Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department, to any “person” who applies for it or to whom the department allots the number without an application.

PAN enables the department to link all transactions of the “person” with the department. These transactions include tax payments, TDS/TCS credits, returns of income/wealth/gift/FBT, specified transactions, correspondence, and so on. PAN, thus, acts as an identifier for the “person” with the tax department.

PAN was introduced to facilitates linking of various documents, including payment of taxes, assessment, tax demand, tax arrears etc. relating to an assessee, to facilitate easy retrieval of information and to facilitate matching of information relating to investment, raising of loans and other business activities of taxpayers collected through various sources, both internal as well as external, for detecting and combating tax evasion and widening of tax base.

A typical PAN is AFZPK7190K.

First three characters i.e. “AFZ” in the above PAN are alphabetic series running from AAA to ZZZ Fourth character of PAN i.e. “P” in the above PAN represents the status of the PAN holder. “P” stands for Individual, “F” stands for Firm, “C” stands for Company, “H” stands for HUF, “A” stands for AOP, “T” stands for TRUST etc. Fifth character i.e. “K” in the above PAN represents first character of the PAN
holder’s last name/surname. Next four characters i.e. “7190” in the above PAN are sequential number running from 0001 to 9999. Last character i.e. “K” in the above PAN is an alphabetic check digit.

WHY IS IT NECESSARY TO HAVE PAN?

It is mandatory to quote PAN on return of income, all correspondence with any income tax authority. From 1 January 2005 it will be mandatory to quote PAN on challans for any payments due to Income Tax Department.
It is also compulsory to quote PAN in all documents pertaining to the following financial transactions :-
(a) sale or purchase of any immovable property valued at five lakh rupees or more;
(b) sale or purchase of a motor vehicle or vehicle, [the sale or purchase of a motor vehicle or vehicle does not include two wheeled vehicles, inclusive of any detachable side-car having an extra wheel, attached to the motor vehicle;]
(c) a time deposit, exceeding fifty thousand rupees, with a banking company ;
(d) a deposit, exceeding fifty thousand rupees, in any account with Post Office Savings Bank;
(e) a contract of a value exceeding one lakh rupees for sale or purchase of securities;
(f) opening a bank account;
(g) making an application for installation of a telephone connection (including a cellular telephone connection);
(h) payment to hotels and restaurants against their bills for an amount exceeding twenty-five thousand rupees at any one time ;
(i) payment in cash for purchase of bank drafts or pay orders or banker’s cheques for an amount aggregating fifty thousand rupees or more during any one day;
(j) deposit in cash aggregating fifty thousand rupees or more with a bank during any one day;
(k) payment in cash in connection with travel to any foreign country of an amount exceeding twenty-five thousand rupees at any one time.

It is statutory responsibility of a person receiving document relating to economic or financial transactions notified by the CBDT to
ensure that PAN has been duly quoted in the document.

It is compulsory to quote PAN on return of income. A penalty of Rs.10,000/- is leviable in case of any default.

Obtaining or possessing more than one PAN is against the law, for which penalty of Rs.10,000/- may be imposed.

In order to improve PAN related services, the Income Tax department as authorized UTI Investor Services Ltd (UTIISL) to set up and manage IT PAN Service Centers in all cities or towns where there is an Income Tax office and National Securities Depository Limited (NSDL) to dispense PAN services from TIN Facilitation Centers. For convenience of PAN applicants in big cities, UTIISL has set up more than one IT PAN Service Center and likewise there are more than one TIN Facilitation Centers.

PAN application should be made only on Form 49A. A PAN application (Form 49A) can be downloaded from the website of Income Tax department or UTIISL or NSDL (www.incometaxindia.gov.in,www.utiisl.co.in ortin-nsdl.com) or printed by local printers or photocopied (on A4 size 70 GSM paper) or obtained from any other source. The form is also available at IT PAN Service centers and TIN Facilitation centers.

PAN application may be made on Form 49A obtained from any source other than IT PAN Service Centers or TIN Facilitation Centers. For instance, a PAN application may be made on form downloaded from the website of Income Tax department or UTIISL or NSDL; or on form printed by local printers or a photocopy of downloaded or printed form.

Permanent Account Number (PAN), as the name suggests, is a permanent number and does not change during lifetime of PAN holder. Changing the address or city, though, may change the Assessing Officer. Such changes must, therefore, be intimated to nearest IT PAN Service Center or TIN Facilitation Center for required correction in PAN databases of the Income Tax department. These requests will have to be made in a form for ‘Request For New PAN Card Or/ And Changes In PAN Data’