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PAN Card: Understanding the Use of PAN

by | Jun 2, 2024 | Income Tax | 0 comments

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Important Keyword: Form 49A, PAN, PAN Application, TIN NSDL, UTIITSL.

What is PAN?

The Income Tax Department (ITD) issues the Permanent Account Number (PAN), an alphanumeric ID presented in the form of a card, to individuals upon application or as per the department’s discretion. PAN serves as a crucial identifier for individuals in their dealings with the tax department, facilitating the linkage of various transactions and activities with the department’s records.

Transactions encompassing tax payments, credits for Tax Deducted at Source (TDS) or Tax Collected at Source (TCS), filing of income/wealth/gift/FBT returns, specified financial transactions, and correspondence are all associated with PAN. In essence, PAN serves as a comprehensive identifier, streamlining the management of individual tax-related activities and ensuring effective communication between taxpayers and the Tax Department.

Use of PAN card

The PAN Card serves as a crucial document for various financial and non-financial transactions, ensuring transparency and accountability in dealings. Here are some instances where the PAN Card is mandatory or highly beneficial:

  1. Sale or Purchase of Assets: Required for transactions involving the sale or purchase of immovable property valued at INR 5,00,000 or more and motor vehicles with more than two wheels.
  2. Bank Account Opening: Mandatory since January 1st, 2016, for opening a bank account, ensuring financial transparency.
  3. Phone Connection: Necessary for obtaining a phone connection, ensuring accountability in telecom transactions.
  4. Gas Connection: Required for procuring a new gas connection, aiding in monitoring energy-related transactions.
  5. Hotel and Restaurant Payments: Mandatory for one-time payments exceeding INR 25,000 in hotels and restaurants, preventing fraudulent transactions.
  6. Foreign Travel: Essential for cash payments exceeding INR 25,000 during foreign travel, ensuring financial transparency.
  7. Tax Deduction and Evasion Prevention: Facilitates the deduction of fraudulent transactions, reduces tax evasion, and ensures transparency in buyer-seller transactions.
  8. Financial Transactions: Mandatory for various financial transactions such as availing institutional financial credits, purchasing high-end consumer items, dealing in securities, etc.
  9. Photo Identification: Accepted as a valuable means of photo identification by both Government and Non-Government institutions across the country.

Understanding PAN Number Format:

A PAN Number typically follows the format: ABCPS1234A

  • The first five characters consist of letters.
  • The next four characters are numerals.
  • The last character is a letter.

Of the first five characters:

  • The first three represent the alphabetic series from AAA to ZZZ (e.g., ALWPG5809L).
PAN Card - First Three Characters of the PAN Number
  • The fourth character represents the status of the PAN holder. (eg. ALWPG5809L). The PAN cardholders have a unique definition:
    • A — Association of Persons (AOP)
    • B — Body of Individuals (BOI)
    • C — Company
    • F — Firm
    • G — Government
    • H — HUF (Hindu Undivided Family)
    • L — Local Authority J — Artificial Judicial Person
    • P — Individual
    • T — AOP (Trust)
PAN Card - Fourth Character of the PAN Number
  • The fifth character represents the first character of the PAN holder’s last name/surname in the case of an individual. In the case of non-individual PAN holders, the fifth character represents the first character of the PAN holder’s name (E.g. ALWPG5809L).
PAN Card - Fifth Character of the PAN Number
  • The next four characters are sequential numbers running from 0001 to 9999 (E.g. ALWPG5809L).
PAN Card - Sixth to Ninth Character of the PAN Number
  • The last character, i.e., the tenth character is an alphabetic check digit (E.g. ALWPG5809L).
Last Character of the Permanent Account Number

The combination of all the above items gives the PAN a unique identity.

PAN card Application Methods

To apply for a PAN card, individuals have the option to do so either online or offline:

Online Application:

TIN-NSDL:
  1. Visit the TIN-NSDL website.
  2. Fill out the online application form.
  3. Submit the form along with the required documents and fees.
  4. Upon successful submission, you will receive an acknowledgment number.
  5. Use this number to track the status of your application.
UTIITSL:
  1. Visit the UTIITSL portal.
  2. Complete the online application process.
  3. Submit the form along with the necessary documents and fees.
  4. Upon submission, you will receive an acknowledgment number.
  5. Utilize this number to monitor your application status.
Offline Application:
  1. Download FORM 49A from the official website.
  2. Review the instructions before filling out the form.
  3. Gather the necessary supporting documents for PAN.
  4. Complete the form accurately and attach the required documents.
  5. Submit the filled form, along with the supporting documents and application fees, at the PAN application center.
  6. Upon acceptance, you will receive an acknowledgment containing a unique number.
  7. Use this number to keep track of your application’s progress.

Read More: PAN Aadhaar Link: Step-by-step Process

Web Stories: PAN Aadhaar Link: Step-by-step Process

Official Income Tax Return filing website: https://incometaxindia.gov.in/

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