PAN Card: Meaning, Documents, Eligibility & How to Apply

For the tax department, it is essential to track the financial transactions and incomes of taxpayers Not just of individuals but also transactions conducted by companies, partnership firms, HUFs , foreigners, etc., are supervised by the department. Tax evasion is one of the most significant reasons why this surveillance is necessary.Enabling the tax authorities to track such transactions is the Permanent Account Number (PAN) that every taxpayer has in the country.

PAN is a 10-digit alphanumeric unique code allotted to every taxpayer by the IT department, as per the guidelines set by the Central Board of Direct Taxes (CBDT). When you apply for a PAN, you receive a laminated plastic card imprinted with your unique 10-digit identification number. The PAN of two taxpayers can never be the same.PAN is the reference point used by the Income Tax Department to identify and track taxpayers and their records. So much so that, Section 139AA of the Income-tax Act,1961 mandates taxpayers link their PAN to their Aadhaar cards.Apart from income tax purposes, there are a variety of day-to-day transactions where a PAN must be cited and recorded.All tax-related information of a taxpayer is stored in an electronic system against their PAN. From receiving a salary or professional fees to investing in mutual funds or the sale or purchase of assets above specified limits, it is mandatory to use the PAN.Apart from being the single most important document for financial transactions and tax-related activities, a PAN also functions as a vital proof of identity in India.

PAN replaced the General Index Number (GIR) system in India. GIR was a largely manual system that was unique at the Assessing Officer level. To replace it with a single national numbering system, PAN was introduced in 1972 by the Indian government. These early-era PANs went on to be referred to as old-series PANs.In 1976, PAN became statutory under section 139A of the Income Tax Act 1961. Thus, the optional PAN became mandatory for all taxpayers During these early days, allotment of PAN was a manual process, with a set of PANs being allotted to wards and circles to maintain their uniqueness. Old series PANs ceased to exist in 1995, and PAN, as we know it today, came into being.

PAN is an alphanumeric identifier that is made up of 10 characters It is in the sequence of five alphabets, four numbers and then one alphabet. A PAN card issued by the Income Tax Department of India is a plastic card the size of a Credit Card. It is bilingual, with information in India’s two official languages – English and Hindi.It contains the following information -

1. “Income Tax Department” and “Govt. of India” are on top, with the lion capital in between.
2. The enhanced QR code contains the signature and photograph of the cardholder.
3. The 10-digit PAN
4. A Government of India hologram
5. Cardholder’s name
6. Cardholder’s father’s name
7. Cardholder’s date of birth
8. Cardholder’s signature
9. Cardholder’s photograph

• P - Individual
• C - Company
• H - Hindu undivided family
• A - Association of persons
• B - Body of individuals
• G - Government agency
• J - Artificial juridical person
• L - Local authority
• F - Firm or limited liability partnership
• T - Trust

1. The first three alphabets represent the alphabetic series ranging from AAA to ZZZ.
2. The fourth alphabet signifies the status of the PAN holder. The different statuses a cardholder can have are -
3. The fifth alphabet represents the first character of the PAN holder’s last name. In the case of non-individual entities, it represents the first character of the PAN holder’s name.
4. The sixth to ninth characters are four numbers within the sequence of 0001 to 9999.
5. The last character in the series is an alphabet.

PAN is mandatory for a lot of transactions and financial dealings; it is only when you have a PAN that you will be able to:

• Open a bank account
• File Income Tax Returns
• Enter into a financial transaction of Rs 50,000 or more
• Register your business
• Carry out foreign transactions
• Check your CIBIL score

Also Read: What Are The Disadvantages Of Having A Bad CIBIL Score?

The “dos” would include:

• Using Form 49AA
• Writing in block letters in English
• Providing 2 passport-size photos
• Signing within the box
• Providing the correct AO code
• The name and address on the form must match the one mentioned in your proof of address and identity

These are the “don’ts” you should keep in mind:

• No overwriting or corrections are permitted in the form
• The use of a pin or staple is not allowed
• Ensure your signature is inside the specified box
• Date, resignation, rank etc. must not be included in your signature
• No abbreviations or initials are to be used in the name
• Do not add the name of your husband in the “Father’s” name section

Every Indian and foreign citizen and entities are eligible to apply for a PAN card. There is no age limit, so even minors can have one.Thus, resident Indians, foreign nationals, companies, firms, etc., are all eligible. Even existing taxpayers, assesses, or people who file tax returns should have one. It is also mandatory in case tax returns are filed on behalf of someone else.Individuals who want to conduct a financial or economic transaction where it is mandatory to quote a PAN should also have a PAN card.Section 139A of the Income Tax Act specifies the conditions when you must have a PAN card.

• Your previous year’s total income, or the total income of anyone in respect of which you are assessable under the Income Tax Act, is more than the income slab not chargeable to income tax.
• You carry on a business or a profession whose total sales or gross receipts are or are likely to be over ₹ 5 lakh.
• You are required to furnish income returns under section 139(4A), i.e., ITR of religious or charitable trusts.
• You are required to file a return of fringe benefits as an employer under section 115WD.
• A non-individual resident who has financial transactions of a total of ₹ 2.5 lakh or more during the financial year.
• With respect to the preceding point, if you are the resident’s managing director, director, partner, trustee, author, founder, CEO, principal officer or office bearer, or someone who is competent to act on the resident's behalf.
• You enter into such transaction as prescribed by the Board in the interest of the revenue.
• Any class of people specified by the government as liable to pay tax, including importers and exporters.
• Any class of people who are instructed to apply for PAN as specified by the government for the purpose of collecting information.
• If the assessing officer, after regarding the nature of the transaction, decides to allot a PAN to any person.

Besides these, it is also applicable if you enter into a financial transaction where quoting of a PAN is mandatory.

The central government, state governments and consular offices are not required to quote a PAN. However, for any other person, quoting a PAN is mandatory in these situations -

• The sale or purchase of a motor vehicle except for two-wheelers.
• Opening an account with a banking company or a cooperative bank other than specified time deposits and basic savings bank deposit accounts.
• While applying for a credit or debit card.
• To open a Demat account with a depository participant, custodian of securities or anyone else, with SEBI.
• One-time cash payment more than ₹ 50,000 for a hotel or restaurant bill.
• One-time cash payment of over ₹ 50,000 in connection with overseas travel or for the purchase of any foreign currency.
• Payment in excess of ₹ 50,000 towards a mutual fund scheme for purchasing its units.
• Payment of over ₹ 50,000 to a company or an institution to purchase its debentures or bonds .
• ₹ 50,000 or more paid to the Reserve Bank of India for acquiring its bonds.
• Cash deposits exceeding ₹ 50,000 in a day with a bank, including a cooperative bank.
• Cash payment of over ₹ 50,000 during one day against bank drafts, pay orders or a banker's cheque from a banking company or a cooperative bank.
• A time deposit of ₹ 50,000 or an aggregate of ₹ 5 lakh or more during a financial year, with a banking company or a non-banking financial company, cooperative bank, Nidhi (section 406 of the Companies Act, 2013), or post office.
• Payment in cash and or by way of a bank draft, pay order or a banker's cheque that is equal to or more than ₹ 50,000 in a financial year for one or more pre-paid payment instruments. These are as per the policy guidelines on pre-paid payment instruments that are issued by the RBI under section 18 of the Payment and Settlement Systems Act 2007. This is made to banks, cooperative banks or other companies or institutions.
• Life insurance premium payment to an insurer aggregating more than ₹ 50,000 in a financial year.
• ₹ 1 lakh or more per transaction paid for the sale or purchase of securities (other than shares).
• Sale or purchase of shares of an unlisted company by any person for an amount exceeding ₹ 1 lakh per transaction.
• Payment of ₹ 10 lakh or more on the sale or purchase of any immovable property or if the transaction is valued over ₹ 10 lakh by stamp valuation authority referred to in section 50C of the Act.
• Payment of ₹ 2 lakh or more on a transaction of sale or purchase of any goods or services other than those specified above.

Further, the government has now made PAN or Aadhaar mandatory for cash deposits and withdrawals involving banks, cooperative banks and post offices if the aggregate value in the financial year exceeds ₹ 20 lakh.

There are a few situations where there is an exception to the mandatory quoting of a PAN.

• A minor can quote their parent’s/guardian’s PAN, provided they do not have any income chargeable to income tax.
• A person without a PAN can execute any of the above transactions by making a declaration in Form No.60.
• Non-residents are not required to quote a PAN in the transactions mentioned in points 3, 5, 6, 9, 11, 13 or 18 above.

As already explained, a PAN card is an important document for income tax purposes. But it is a useful document needed for many other day-to-day activities. These include -

• As an approved identity and date of birth proof.
• For banking activities, starting with opening an account.
• To apply for a loan.
• While buying or selling property above ₹ 5 lakh in value.
• To purchase jewellery or bullion worth ₹ 5 lakh or more.
• For payment wallets.
• To get an LPG and most other utility connections.
• To open a Demat account and much more.

To know more about the uses and benefits of PAN, you can also read this article .

You can apply for a PAN online or offline. UTI Infrastructure and Technology and Service Limited (UTIITSL) and Protean e-Gov Technologies Limited (PTL, formerly NSDL) manage PAN service centres for the Income Tax Department.To apply for a PAN, you must fill out Form 49A/49AA. The PAN application form, along with your related documents and PAN card apply feesmust be submitted at the UTIITSL or PTL PAN application centres. An application can also be made on the UTIITSL or PTL website. Form 49A is meant for residents, while 49AA is for non-residents and foreign companies.Here is a brief overview of the online and offline PAN application process -

Online PAN Application

• Visit the NSDL or UTIITSL website and fill out the application form.
• Select “Form 49A” as “Application Type” if you’re a resident Indian and want to apply for a new PAN.
• In the “Category” column, select your applicable category from Individual, Company, Trust, etc.
• Enter “Applicant Information” like Title, Last Name, First Name, Middle Name, DOB, Email ID, and Mobile Number.
• Enter the captcha code and click on “Submit”.
• Attach relevant identity, address, and date of birth proofs.
• Pay the applicable fee online to receive an “Acknowledgment Number” and complete the application process.

Offline PAN Application

If you want to apply for a PAN Card offline, you can visit the nearest district-level PAN agency. A list of these agencies can be found on the PTL(NSDL) and UTIITSL websites. Here is how you can apply for PAN offline -

• Visit the nearest PAN agency.
• Fill out the application form and attach relevant documents.
• Pay the processing fee along with the documents to complete your application.

Once you have successfully completed the online or offline PAN application, it will be dispatched to your postal address within 15 working days. In case you have applied for an e-PAN, it will be sent to your registered email address in PDF format within 15 days.

According to section 272B of the Income Tax Act, it is illegal to own more than one PAN. It attracts a fine of ₹ 10,000. If multiple PANs are used in evading tax, the rules of the Income Tax Act on tax evasion become applicable. This can include jail time.

• Obtain the PAN Change Request form
• Fill out the form, and mention the PAN you are using at the top of the form
• All other PAN(s) allotted to you must be mentioned in item 11 of the form
• Submit the form with all the other PAN cards

The fee for applying through e-KYC and e-sign is ₹ 101 (₹ 93 plus 18% GST) for Indian addresses and ₹ 1,011 (application fee + dispatch charge ₹ 857 + 18% GST) for foreign addresses. For PAN application through a physical mode, the fee is ₹ 107 for Indian addresses and ₹ 1,017 for foreign addresses.In case you do not want a physical PAN Card, you can apply for an e-PAN Card, which is a valid substitute. The processing fee for an e-PAN is ₹ 66 if the application is through e-KYC and e-sign and ₹ 72 for a physical application.

Aadhaar number holders can also apply for an instant PAN based on the details. Such a person must not have a PAN, must have the date of birth and phone number recorded in their Aadhaar details, and must not be a minor at the time of registering a PAN application.

Section 139AA provides that a person applying for a PAN must quote their Aadhaar number or the enrolment ID of the Aadhaar application form.The section further states that existing PAN Card holders who are eligible to obtain an Aadhaar number must intimate their Aadhaar number to the Income Tax department. Failure to do so would render the PAN inoperative. The last date for PAN-Aadhaar linkage has been extended to 30th June 2023.An inoperative PAN would have the same effect as not furnishing, intimating or quoting a PAN in transactions, with similar consequences.To know the problems you may face while linking a PAN and Aadhaar and how to tackle them, you must read this article .

To check your PAN-Aadhaar link status, use the following steps -

• Type the following as an SMS - UIDPAN <12-digit Aadhaar number> < 10-digit PAN number>.
• Send the SMS to ‘567678’ or ‘56161’.
• Wait for a reply.
• You will receive a message intimating if the Aadhaar-PAN link exists in the Income Tax Department database.

If your PAN Card is lost, stolen or damaged, you can apply for a new copy of the card. You can also download an e-PAN immediately.Log on to the Income Tax portal, UTIITSL or PTL website to download an e-PAN. You must fill in a form and provide details like your name, phone number, and email address. The e-PAN is mailed to your inbox. You can download it from there and use it till you receive the new physical copy of your PAN card.

The importance of PAN in financial transactions and our everyday life cannot be denied. Everyone must have a PAN for its importance as well as usefulness. If you don’t have a PAN yet, apply for it online or offline today!Ready to make the most of your money? Start your tax planning journey now!