Lets’ us understand what is PAN and some important aspects of PAN. PAN enables the income tax department to link all transactions of the assessee. These transactions includes but not restricted to tax payments, TDS/TCS credits, returns of income, specified transactions, correspondence and so on. It facilitates easy retrieval of information of assessee and matching of various investments, borrowings and other business activities of assessee.
What is PAN?
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.
Who has to obtain PAN?
PAN is to be obtained by :
- Every person if his total income or the total income of any other person in respect of which he is assessable during the previous 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 previous year
- Every importer/exporter who is required to obtain Import Export code
- Every person who is entitled to receive any sum/income after deduction of tax at source
- Any person who is liable to pay excise duty or a producer or manufacturer of excisable goods or a registered person of a private warehouse in which excisable goods are stored and an authorized agent of such person
- Any person, if his total income assessable during the previous year exceeds the maximum amount which is not chargeable to tax.
- Persons who issue invoices under Rule 57AE requiring registration under Central Excise Rules, 1944
- A person who is liable to pay the service tax and his agent
- Persons registered under the Central Sales Tax Act or the general sales tax law of the relevant state or union territory
- Every person who intends to enter into specified financial transactions in which quoting of PAN is mandatory
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.
Illustrative PAN “ A B C PS XXXX C”
Out of the first five characters, the first three characters represent the alphabetic series running from AAA to ZZZ.
Illustrative PAN : ABC P S XXXX C”
The fourth alphabetic character of PAN represents the status of the PAN holder.
“P” stands for Individual
“C” stands for Company
“H” stands for Hindu Undivided Family (HUF)
“A” stands for Association of Persons (AOP)
“B” stands for Body of Individuals (BOI)
“G” stands for Government Agency
“J” stands for Artificial Juridical Person
“L” stands for Local Authority
“E” stands for Limited Liability Partnership
“F” stands for Firm
“T” stands for Trust
Illustrative PAN : ABCP S XXXX D
The 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.
Illustrative PAN : ABCPS XXXX D
Next four characters are sequential numbers running from 0001 to 9999
Illustrative PAN : BLGPS XXXX D
Last character, i.e., the tenth character is an alphabetic check digit.
How to apply for PAN?
Income Tax Department has authorized UTI Infrastructure Technology and Services Limited (UTIITSL) and National Securities Depository Limited (NSDL) to set up and manage PAN Service Centers. UTIITSL and NSDL have established PAN Service Centers and TIN Facilitation Centers at various places in major cities of India (herein after referred to as TIN centers).
Thus, a person wishing to obtain PAN can apply for PAN by submitting the PAN application form (Form 49A/49AA) along with the related documents and prescribed fees at the PAN application center of UTIITSL or NSDL. An online application can also be made from the website of UTIITSL or NSDL.
A resident person shall apply for PAN in form 49A and a non-resident person including a foreign company shall apply for allotment of PAN in form 49AA.
Individual applicants will have to affix two recent, colored photographs (Stamp size 3.5 cms x 2.5. cms) on PAN application form.
Prescribed document must be furnished as a proof of ‘Identity’ ‘Address’ and ‘Date of Birth’. Designation and Code of concerned Assessing Office of Income Tax Department required to be mentioned in PAN application form. The address, phone numbers, etc., of TIN centers of UTIITSL or NSDL at which PAN application can be submitted can be obtained from :
- Website of Income Tax Department (www.incometaxindia.gov.in)
- Website of UTIITSL (www.utiitsl.com)
- Website of NSDL (www.tin-nsdl.com)
Holding of more than one PAN not allowed
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). The same can be submitted at http://incometax.sparshindia.com/pan/pan.asp.
How to know PAN, if the PAN card is lost and PAN is forgotten?
In such a case, one can know his PAN by using the facility of “Know Your PAN” provided by the Income Tax Department. This facility can be availed of from the website of Income Tax Department – www.incometaxindia.gov.in
A person can know his PAN online by providing his core details like Name, Father’s Name and Date of Birth. After knowing the PAN you can apply for duplicate PAN card by submitting the “Request For New PAN Card Or/ And Changes Or Correction in PAN Data”.
Penalty for not complying with provisions relating to PAN
Section 272B provides for penalty in case of default by the taxpayer in complying with the provisions relating to PAN, i.e., not obtaining PAN even when he is liable to obtain PAN or knowingly quoting incorrect PAN in any prescribed document or intimating incorrect PAN to the person deducing tax or person collecting tax. Penalty of Rs. 10,000 under section 272B can be levied
How to correct any mistake in PAN card or intimate any change in data pertaining to PAN?
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.
Transactions in which quoting of PAN is mandatory
- Sale or purchase of any immovable property valued at five lakh rupees or more
- Sale or purchase of a motor vehicle or vehicle (other than two wheeled vehicles).
- Making a time deposit with a banking company exceeding fifty thousand rupees or deposit in Post Office Savings Bank exceeding fifty thousand rupees.
- In an application for telephone connection including cellular telephone.
- Payment in cash for purchase of bank drafts or pay orders or banker’s cheque for an amount aggregating to fifty thousand rupees or more during anyone day or deposit in cash aggregating to fifty thousand rupees or more with a bank during any one day.
- A contract of a value exceeding one lakh rupees for sale or purchase of securities.
- Opening of a bank account. In case of a minor, PAN of Father, Mother or guardian, as the case may be, shall be mentioned
- Payment to hotels and restaurants against their bills for an amount exceeding twenty five thousand rupees at any one time.
- Payment in cash in connection with travel to any foreign country of an amount exceeding twenty five thousand rupees at any one time. Travel to foreign country does not include travel to Bangladesh, Bhutan, Maldives, Nepal, Pakistan or Sri Lanka or Travel to Saudi Arabia for Haj or travel to China on Pilgrimage to Kailash Mansarover.
- Making an application for issue of credit card or debit card.
- Payment of an amount of fifty thousand rupees or more to a Mutual Fund for purchase of its units.
- Payment of an amount of fifty thousand rupees or more to a company for acquiring shares issued by it.
- Payment of an amount of fifty thousand rupees or more to a company or an institution for acquiring debentures or bonds issued by it;
- Payment of an amount of fifty thousand rupees or more to the Reserve Bank of India for acquiring bonds issued by it.
- Payment of an amount aggregating fifty thousand rupees or more in a year as life insurance premium to an insurer.
- Payment to a dealer :
- of an amount of five lakh rupees or more at any one time; or
- against a bill for an amount of five lakh rupees or more for purchase of bullion or jewellery
A person not holding PAN and intending to enter into the specified transactions can furnish Form No. 60 (Form 61 in case of person having only agricultural income).