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Permanent Account Number (PAN)
PAN (Permanent Account Number) is an identification number assigned to all taxpayers in India. PAN is a ten-digit unique alphanumeric number issued by the Income Tax Department. PAN is issued in the form of a laminated plastic card as given below (commonly known as PAN card). Now we shall discuss on the structure of the ten characters of PAN. For this purpose we shall take an illustrative PAN as given below:
BLGPX1234A
Out of the first five characters, the first three characters represent the alphabetic series running from AAA to ZZZ.
BLGPXXXD
Illustrative PAN : BLGPSXXXD
Fifth character of PAN represents the first character of the PAN holder's last name/surname in case of an individual. In case of non-individual PAN holders fifth character represents the first character of PAN holder's name.
Next four characters are sequential numbers running from 0001 to 9999.
Who has to obtain PAN?
- Every person if his total income or the total income of any other person in respect of which he is assessable during the year exceeds the maximum amount which is not chargeable to tax.
- A charitable trust who is required to furnish return under Section 139(4A).
- Every person who is carrying on any business or profession whose total sale, turnover, or gross receipts are or is likely to exceed five lakh rupees in any year.
- Every person who intends to enter into specified financial transactions in which quoting of PAN is mandatory.
- Every non-individual resident persons and persons associated with them shall apply for PAN if the financial transaction entered into by them during the financial year exceeds Rs. 2,50,000.
Transactions in which voting of PAN is mandatory
- Sale or purchase of a motor vehicle or vehicle other than two wheeled vehicles.
- Opening an account [other than a time-deposit referred at point No. 12 and a Basic Savings Bank Deposit Account] with a banking company or a co-operative bank
- Making an application for issue of a credit or debit card.
- Opening of a demat account with a depository, participant, custodian of securities or any other person with SEBI.
- Payment in cash of an amount exceeding Rs. 50,000 to a hotel or restaurant against bill at any one time.
- Payment in cash of an amount exceeding Rs. 50,000 in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time.
- Payment of an amount exceeding Rs. 50,000 to a Mutual Fund for purchase of its units.
- Payment of an amount exceeding Rs. 50,000 to a company or an institution for acquiring debentures or bonds issued by it.
- Payment of an amount exceeding Rs. 50,000 to the Reserve Bank of India for acquiring bonds issued by it.
- Deposits of cash exceeding Rs. 50,000 during any one day with a banking company or a co-operative bank.
- Payment in cash for an amount exceeding Rs. 50,000 during any one day for purchase of bank drafts or pay orders or banker's cheques from a banking company or a co-operative bank.
- A time deposit of amount exceeding Rs. 50,000 or aggregating to more than Rs. 5 lakh during a financial year with
- a banking company or a co-operative bank
- a Post Office;
- a Nidhi referred to in section 406 of the Companies Act, 2013 or
- a non-banking financial company
Payment in cash or by way of a bank draft or pay order or banker's cheque of an amount aggregating to more than Rs. 50,000 in a financial year for one or more pre-paid payment instruments, as defined in the policy guidelines for issuance and operation of pre-paid payment instruments issued by Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007 to a banking company or a co-operative bank or to any other company or institution.
Payment of an amount aggregating to more than Rs. 50,000 in a financial year as life insurance premium to an insurer
A contract for sale or purchase of securities (other than shares) for amount exceeding Rs. 1 lakh per transaction
Sale or purchase, by any person, of shares of a company not listed in a recognised stock exchange for amount exceeding Rs. 1 lakh per transaction.
Sale or purchase of any immovable property for an amount exceeding Rs. 10 lakh or valued by stamp valuation authority referred to in section 50C of the Act at an amount exceeding ten lakh rupees.
Sale or purchase of goods or services of any nature other than those specified above for an amount exceeding Rs. 2 lakh per transaction.
- Any person, who does not have PAN and enters into any of above transaction, can make a declaration in Form No 60.
- Quoting of PAN is not required by a non-resident in a transaction referred at point No. 3 or 5 or 6 or 9 or 11 or 13 or 18.
- Any person who has an account (other than a time deposit referred at point no. 12 and a Basic Saving Bank Deposit Account) maintained with a banking company or a co-operative bank. He will be required to furnish his PAN or Form No. 60 on or before 30-06-2017 if he has not quoted his PAN or furnished Form No. 60 at the time of opening of such account or subsequently.
How to apply for PAN?
Step 1: Open the NSDL site (https://www.onlineservices.nsdl.com/paam/endUserRegisterContact.html) to apply for a new PAN.
Step 2: Select the Application type – New PAN for Indian citizens, foreign citizens or for change/correction in existing PAN data.
Step 3: Select your category – individual, associations of persons, a body of individuals, etc.
Step 4: Fill in all the required details like name, date of birth, email address and mobile number in the PAN form.
Step 5: On submitting the form, you will get a message regarding the next step.
Step 6: Click on the “Continue with the PAN Application Form” button.
Step 7: You will be redirected to the new page where you have to submit your digital e-KYC.
Step 8: Select whether you need a physical PAN card or not and provide the last four digits of your Aadhaar number.
Step 9: Enter your personal details, contact and other details in the next part of the form.
Step 10: Enter your area code, AO Type, and other details in this part of the form. You can also find these details in the tab below
Step 11: The last part of the form is the document submission and declaration.
Step 12: Enter the first 8 digits of your PAN card to submit the application. You will get to see your completed form. Click Proceed if no modification is required.
Step 13: Select the e-KYC option to verify using Aadhaar OTP. For Proof of Identity, Address and Date of Birth, select Aadhaar in all fields and click on Proceed to continue.
Step 14: You will be redirected to the payment section where you have to make payment either through demand draft or through net banking/debit/credit card.
Step 15: A payment receipt will be generated on successful payment. Click on “Continue”.
Step 16: Now for Aadhaar Authentication, tick the declaration and select the “Authenticate” option.
Step 17: Click on “Continue with e-KYC” after which an OTP will be sent to the mobile number linked with Aadhaar.
Step 18: Enter the OTP and submit the form.
Step 19: Now click on “Continue with e-Sign” after which you will have to enter your 12-digit Aadhaar number. An OTP will be sent to the mobile number linked with Aadhaar.
Step 20: Enter OTP and submit the application to get the Acknowledgement slip in pdf having your date of birth as the password in DDMMYYYY format.
How to correct any mistake in PAN card or intimate any change in data pertaining to PAN?
- Request for reissue of lost PAN card or for change/correction in PAN data is to be filed in “Request for New PAN Card Or/ And Changes Or Correction in PAN Data”.
- For Changes or Correction in PAN data, fill all mandatory fields of the Form and select the corresponding box on left margin of appropriate field where correction is required.
- If the application is for re-issuance of a PAN card without any changes in PAN related data of the applicant, fill all fields in the Form but do not select any box on left margin.
- In case of either a request for Change or Correction in PAN or request for re-issuance of a PAN Card without any changes in PAN data, the address for communication will be updated in the ITD database using address for communication provided in the application.
- For Cancellation of PAN, fill all mandatory fields in the Form, enter PAN to be cancelled in appropriate column of the Form and select the check box on left margin. PAN to be cancelled should not be same as PAN (the one currently used) mentioned at the top of the Form.
What if a person hold more than one PAN?
A person cannot hold more than one PAN. A penalty of Rs. 10,000/- is liable to be imposed under section 272B of the Income-tax Act, 1961 for having more than one PAN. If a person has been allotted more than one PAN then he should immediately surrender the additional PAN card(s).
PAN and AADHAR are interchangeable for Income-tax purpose
- has not been allotted a PAN but possesses the Aadhaar number, may furnish or intimate or quote his Aadhaar in lieu of PAN. Further, Income-tax department shall allot PAN to such person in prescribed manner.
- has been allotted a PAN, and who has linked his Aadhaar number with PAN as per section 139AA, may furnish his Aadhaar number in lieu of a PAN for all the transactions where quoting of PAN is mandatory as per Income-tax Act.
Penalty for not complying with provisions relating to PAN or Aadhar
Section 272B provides for penalty in case of default in complying with the provisions relating to PAN, i.e., failure to obtain, quote, or authenticate PAN. The amount of penalty shall be Rs. 10000 for each default.
As the Finance (No. 2) Act, 2019 as provided for interchangeability of Aadhar with PAN, Consequential amendments have been made in the penal provisions of Section 272B so as to levy a penalty of Rs. 10,000 for each default in the following cases:
- If assessee fails to quote or intimate his PAN or Aadhaar or quotes or intimates invalid PAN or Aadhaar.
- If assessee fails to quote or authenticate his PAN or Aadhaar in specified transactions.
- If receiver (i.e., banks, financial institution, etc.) of documents in respect of specified transactions fails to ensure that the PAN or Aadhaar are duly quoted and authenticated.
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