What is a PAN Card?
The most obvious question come to person not aware fully towards his rights and duties. Firstly the full form of PAN is Permanent Account Number. PAN is a unique code which is used to identify the Indian nationals mainly who pays Income Tax. It is a unique 10-digit alpha numeric code which is used by Income Tax Department of India (under the supervision of CBDT) to identify the tax payers in India.
It is provided by Income Tax Department. Through NSDL e-Governance Infrastructure Limited (formerly National Securities Depository Limited) and UTI Infrastructure Technology Services Limited (UTIITSL). They are providers for processing of applications, collecting and handling. And also verifying documents like proof of ID, age and address, further clarification, printing card and the letter and then mailing it. Read further about this in our article “How to apply for PAN”.
But it is not a proof of citizenship in India like other cards like Voter ID-Card or Aadhar Card or Driving License. PAN can also be issued to foreign citizens subject to some conditions. It is issued by Income Tax department under section 139(A) Of Income Tax Act,1961. It is issued to person having income originated in India.
The main purpose to issue PAN and provide unique code to is to track and monitor financial transaction going through Bank Circuits and to prevent Tax Evasion. Specially to watchdog on high value transaction.
The next question will arise “should every individual have to apply for PAN or is it mandatory to apply for PAN in India?”
PAN is not mandatory for all to apply, but now Income Tax Department is emphasizing to make it necessary in some situation to make all to have PAN.
PAN is mandatory when filing Income Tax returns, tax deduction at source, or any other communication with Income Tax Department.
The following are a list of a few situations where you have to quote the PAN and need to apply for one
- When you buy or sell immovable property.
- When you buy or sell a motor vehicle.
- When you pay more than fifty thousand rupees to hotels or restaurants, or do such transactions when on travel.
- When you deposit more than Rs.50,000/- with your bank or your post office account.
Format of a PAN Card.
- PAN consist of first five character are letter and then 4 numbers and last character is also a letter: for Example AAAPC6789G
- The first three letters are sequence of alphabets which can be any alphabet and mainly depend on the series going on.
- Fourth character tells the constituency of holder, like:-
- A— AOP (Association of Persons )
- B— BOI (Body of Individuals)
- C— Company
- F— Firm
- H— HUF
- J— Artificial Juridical Person
- P— Individual
- T— Trust
- The fifth character of the PAN is the first character of the surname or last name of the person, in the case of a “Personal” PAN card. Or of the name of the Entity, Trust, society, or organization in the case of Company/ HUF/ Firm/ AOP/ BOI/ Artificial Judicial Person.
- Next four number can be any number as per series going on
- The last character is an alphabetic digit for checking purposes.
Apart from this PAN is important in various transaction now a days
Such as opening a bank account, receiving taxable salary or professional fees, sale or purchase of assets above specified limits etc.; especially high-value transactions.
- Furnishing PAN is mandatory for cash transactions such as hotel or foreign travel bills exceeding Rs 50,000.
- It is a must for all transactions, including purchase of Jewellery, above Rs 2 lakhs in cash or through card.
- It is also mandatory on purchase of immovable property of over Rs 10 lakh.
- Quoting of PAN is also mandatory for term deposits exceeding Rs 50,000 at one go or Rs 5 lakh in a year with banks, Post Offices and NBFCs.
- It is mandatory for payments of more than Rs 50,000 for cash cards or prepaid instruments, and also for acquiring shares of unlisted companies for Rs 1 lakh and above.
- It has also been made mandatory for opening all bank accounts, except Pradhan Mantri Jan Dhan Yojana accounts.
- Finance minister Arun Jaitley had earlier announced in Parliament, that PAN would be made mandatory for all cash and card transactions beyond Rs 2 lakh.
- It is must when applying for debit or credit card.
- Purchase/sale of vehicle other than two wheelers.