PAN (Permanent Account Number) is a 10-digit Unique Identification number assigned to all taxpayers in India. The Income Tax Department issues a PAN card, which acts as an identity proof of an individual or an entity for various purposes. PAN card is a crucial document when it comes to taxation. PAN is an electronic system that records all tax-related information for a person/company against a single PAN number. It is a primary key for the storage of information. Also, this is shared across the country. Hence no two tax-paying entities i.e. no two individuals or tax paying businesses can have the same PAN.
PAN is a unique 10-digit alphanumeric character, while the PAN card is a physical or digital card containing the PAN and other important information about the person.
PAN Card idea was introduced by the Indian government in 1972 and made statutory under section 139A of the Income Tax Act of 1961. Initially, PAN was optional and it was made mandatory for all tax-paying persons in 1976.
As per the new format of PAN cards introduced by the Income Tax Department on 1 January 2017, all PAN cards will contain a Quick Response (QR) code carrying the cardholder’s details. This code can also be used for data verification. It will also contain the cardholder’s name, father’s name, date of birth, and signature.
Format of PAN card
PAN Card contains the below mentioned information:
- Name of the cardholder: Full Name of the individual, partnership firm, LLP or company.
- Name of the father of the cardholder: Applicable for only individual cardholders.
- Date of birth: The cardholder’s date of birth in the case of an individual or the date of registration in the case of a company or firm.
- Photograph of the cardholder: PAN acts as a photo identity proof of the individual. But no photograph is there incase of companies and firms.
- PAN Number: It is a 10-digit alpha-numeric number in which each character represents information about the cardholder.
- Signature of the cardholder: This is applicable only for the individual cardholders and not for the company and firms. PAN card also acts as proof of the individual’s signature required for financial transactions.
- The hologram of the Government of India along with the tag of the Income Tax Department.
Structure of Permanent Account Number (PAN)
It is a 10-digit alphanumeric number and each character represents distinct information of the cardholder.
- The first 3 letters in a PAN Card are purely alphabetical in nature and contain three-letter of the alphabet from A to Z.
- The 4 letter is an alphabet that represents the category of the taxpayer.
Below are the various entities and their respective characters:
- A – Association of Persons
- B – Body of Individuals
- C – Company
- F – Firms
- G – Government
- H – Hindu Undivided Family
- L – Local Authority
- J – Artificial Judicial Person
- P – Individual
- T – Association of Persons for a Trust
3. The fifth letter is the first letter of the individual’s surname
4. The next 4 letters are purely numerical in nature and are numbers between 0-9.
5. The last letter is an alphabet.
Types of PAN
These are the different types of PAN card issued to tax-paying entities in India:
- Individual, including minors and students
- Hindu Undivided Family (HUF)
- Company
- Partnership Firms
- Trusts
- Limited Liability Partnership (LLP)
- Association Of Person (AOP)
- Society
- Body Of Individuals (BOI)
- Foreigners
Who all are eligible for PAN Card?
All the Indian citizens and Non-Resident Indians (NRIs) are eligible to apply for a PAN card in India. All tax paying entities like individuals, minors, firms, companies, trusts, partnerships, association persons, Hindu undivided families, etc., are also eligible to apply for a PAN card. A PAN card is mandatory for all persons who pay taxes in India and carry out financial transactions in India.
Under section 139A of the Income Tax Act, the following taxpaying entities are required to have a PAN Card:
- Any Individual who pay taxes or who is liable to pay tax to the Income Tax Department. A person is liable to pay tax if his income surpasses the income tax slabs’ starting point which is decided on the basis of tax slabs.
- Individuals who earn taxable money for the benefit of others (such as earnings of a minor).
- Any Individual who has a business or a professional practise with an annual income or sale of more than Rs.5 lakh in any year of assessment.
- Importers and exporters who are liable to pay any form of tax or duty charges as per the Income Tax Act or as per any prevalent law
- All kinds of trusts, charitable organizations, and associations.
- Individuals who have registered under a union territory or state’s general sales tax law or the Central Sales Tax Act.
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