1. What is PAN?
PAN stands for Permanent Account Number. 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 (commonly known as PAN card). Given below is an illustrative PAN:
ALWPG5809L
2. What is the utility of PAN?
PAN enables the department to link all transactions of the assessee with the department. These transactions include 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.
3. What are the benefits of obtaining a Permanent Account Number [PAN] and PAN Card?
A Permanent Account Number has been made compulsory for every transaction with the Income-tax Department. It is also mandatory for numerous other financial transactions such as opening of bank accounts, in bank account, deposit of cash in bank account, opening of Demat account, transaction of immovable properties, dealing in securities, etc. A PAN card is a valuable means of photo identification accepted by all Government and non-Government institutions in the country.
4. How PAN is formed and how it gets its unique identity?
PAN is a ten-digit unique alphanumeric number issued by the Income Tax Department. The formation of PAN is discussed below :
- Out of the first five characters, the first three characters represent the alphabetic series running from AAA to ZZZ. ( E.g. ALW PG5809L).
- The fourth character of PAN represents the status of the PAN holder ( E.g. ALW P G5809L).
"A" stands for Association of Persons (AOP)
"A" stands for Association of Persons (AoP)
"B" stands for Body of Individuals (BOI)
"C" stands for Company
"E" stands for Limited Liability Partnership
"F" stands for Firm
"G" stands for Government Agency
"H" stands for Hindu Undivided Family (HUF)
"J" stands for Artificial Juridical Person
"L" stands for Local Authority
"P" stands for Individual
"T" stands for Trust
- 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 ( E.g. ALWP G 5809L)
- Next four characters are sequential numbers running from 0001 to 9999 ( E.g. ALWPG 5809 L).
- Last character, i.e. , the tenth character is an alphabetic check digit ( E.g. ALWPG5809 L ).
The combination of all the above items gives the PAN its unique identity.
5. Who has to obtain PAN?
PAN is to be obtained by following persons:
- 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
- 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
A person not covered in any of the above can voluntarily apply for PAN.
6. What are the specified financial transactions in which quoting of PAN is mandatory?
Following are the transactions in which quoting of PAN is mandatory by every person except the Central Government, the State Governments and the Consular Offices:
1. Sale or purchase of a motor vehicle or vehicle other than two wheeled vehicles.
2. 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
3. Making an application for issue of a credit or debit card.
4. Opening of a demat account with a depository, participant, custodian of securities or any other person with SEBI
5. Payment in cash of an amount exceeding Rs. 50,000 to a hotel or restaurant against bill at any one time.
6. 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.
7. Payment of an amount exceeding Rs. 50,000 to a Mutual Fund for purchase of its units
8. Payment of an amount exceeding Rs. 50,000 to a company or an institution for acquiring debentures or bonds issued by it.
9. Payment of an amount exceeding Rs. 50,000 to the Reserve Bank of India for acquiring bonds issued by it.
10. Deposits of cash exceeding Rs. 50,000 during any one day with a banking company or a co-operative bank.
11. 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.
12. A time deposit of amount exceeding Rs. 50,000 or aggregating to more than Rs. 5 lakh during a financial year with –
(i) a banking company or a co-operative bank
(ii) a Post Office;
(iii) a Nidhi referred to in section 406 of the Companies Act, 2013 or
(iv) a non-banking financial company
13. 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.
14. Payment of an amount aggregating to more than Rs. 50,000 in a financial year as life insurance premium to an insurer
15. A contract for sale or purchase of securities (other than shares) for amount exceeding Rs. 1 lakh per transaction
16. 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.
17. 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.
18. Sale or purchase of goods or services of any nature other than those specified above for an amount exceeding Rs. 2 lakh per transaction.
NOTE:
1. Minor person can quote PAN of his father or mother or guardian provided he does not have any income chargeable to income-tax.
2. Any person, who does not have PAN and enters into any of above transaction, can make a declaration in Form No.60.
3. 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.
7. How does Income Tax Department ensure that PAN is quoted on transactions in which quoting of PAN is mandatory?
It is statutory responsibility of a person receiving document relating to economic or financial transactions notified by the Central Board of Direct Taxes (CBDT) to ensure that PAN has been duly quoted in the documents in which quoting of PAN is mandatory. Thus, the receiver of these documents will ensure that PAN is quoted in the respective document. E.g. PAN is necessary to open a bank account and hence the Bank will ensure that the applicant has quoted his PAN at the time of applying for bank account.
8. Can I file my return of income without quoting PAN?
It is mandatory to quote PAN on the return of income. Apart from return of income, PAN is also to be quoted in all challans for making payment of tax, correspondence with the Income Tax Department, etc.
9. How to apply for PAN?
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. PAN application form ( i.e. 49A/49AA) can be down loaded from www.incometaxindia.gov.in .
Application for PAN is to be made in Form 49A (in the case of Indian Citizen/Indian Companies/Entities incorporated in India/Unincorporated entities formed in India) or Form 49AA (in the case of individual not being a citizen of India/Entities incorporated outside India/Unincorporated entities formed outside India).
In case of an applicant, being a company which has not been registered under the Companies Act, 2013, the application for allotment of a Permanent Account Number may be made in Form No. INC-7 specified under sub-section (1) of section 7 of the said Act for incorporation of the company.
An online application can also be made from the website of UTIITSL or NSDL ( i.e. www. utiitsl.com and www.tin-nsdl.com). The address, phone numbers, etc., of PAN application centers of UTIITSL or NSDL at which PAN application can be submitted can be obtained from the above discussed websites.
Applicant will receive an acknowledgment containing a unique number on acceptance of the application form. This acknowledgement number can be used for tracking the status of the application by using the track status facility available at above web sites.
10. Are there any charges to be paid for obtaining the PAN?
The applicant has to pay a fee of Rs. 93 + Service Tax as applicable, per PAN application. In case, the PAN card is to be dispatched outside India then the fee for processing PAN application is Rs. 864 (Rs. 93 application fees and Rs. 771 dispatch charges)/- will have to be paid by applicant.(plus service tax as applicable).
11. Is there any TATKAL facility for allotment of PAN?
No
12. Can an application for PAN be made on plain paper?
Application for PAN cannot be made on plain paper. The application for PAN is to be made in the prescribed form i.e. Form 49A/49AA as the case may be. Form 49A is to be used by Indian Citizen/Indian Companies/Entities incorporated in India / Unincorporated entities formed in India and Form 49AA is to be used by individual not being a citizen of India/Entities incorporated outside India/Unincorporated entities formed outside India).
In case of an applicant, being a company which has not been registered under the Companies Act, 2013, the application for allotment of a Permanent Account Number may be made in Form No. INC-7 specified under sub-section (1) of section 7 of the said Act for incorporation of the company.
13. What if I submit incomplete PAN application i.e. Form 49A/49AA?
IT PAN Service Centers or TIN Facilitation Centers shall not receive any incomplete and deficient PAN application. However, these centers will assist applicants to correctly fill up form 49A/49AA (as the case may be).
14. Is it necessary to fill the PAN application form i.e. Form 49A/49AA in block letters?
Yes, Form 49A/49AA (as the case may by) should be filled legibly in BLOCK LETTERS and preferably in black ink. It should also be noted that, each box, wherever provided, should contain only one character (alphabet /number / punctuation sign) leaving a blank box after each word.
15. What documents and information have to be submitted along with the PAN application in Form 49A/49AA?
The documents required to be submitted with the PAN application are specified in Rule 114 of the Income-tax Rules. The details of the documents required are also provided in the application form. Individual applicants have to provide document pertaining to proof of identity, proof of address and proof of date of birth. The name of the applicant as mentioned in application form and the name appearing in the documents submitted along with the application should match exactly.
Individual applicants should affix two recent colour photographs with white background (size 3.5 cm x 2.5 cm) in the space provided on the form. The photographs should not be stapled or clipped to the form. The clarity of image on PAN card will depend on the quality and clarity of photograph affixed on the form. |
