What is PAN?
PAN is an Identity Proof which is administered by the income tax department of India’s union government. it has 10 digits unique alphanumeric number letter. After applying for PAN it is issued in the form of an e-PAN in a registered email & Physical PAN of a laminated PVC card is sent to the communication address given below (generally known as a PAN card)
Now we will examine the format of the ten characters of PAN. For this purpose, we will bring an illustrative PAN
If the PAN Number is AAAPA 0000 A
Out of the first five characters, the first three characters denote the alphabetic sequence running
from AAA to ZZZ
The fourth letter of PAN is
The fourth 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
“F” stands for Firm/ Limited Liability Partnership
“T” stands for Trust
Illustrative PAN: AAAPA 0000 A
The fifth character of PAN denotes the first surface of the PAN holder’s last name/surname in the case of an individual.
In the case of non-individual PAN holders, the fifth character denotes the first character of the PAN holder’s name.
Illustrative PAN: AAAPA 0000 A
The next four characters are sequential numbers running from 0001 to 9999.
Illustrative PAN: AAAPA 0000 A
The last character, i.e., the tenth digit is an alphabetic assessment digit
Utility of PAN
PAN allows the division to identify/ link all transactions of the PAN holder with the division. These transactions contain Loans that have been taken, GST, Income tax payments, TDS/TCS credits, To file ITR, etc. It enables easy recovery of data of PAN holders and matching of diverse acquisitions, borrowings and other trade activities of PAN holders.
Who has to apply for PAN?
Anyone citizen of India and NRI having earnings in India can apply
Anyone who has the total earnings or the total income of any other person in concern of which he is assessable during the year surpasses the maximum amount which is not chargeable to tax.
Anyone looking to apply for GST Registration
Planning to Open a bank account or demand account PAN mandatory
A charitable trust is required to deliver a return under Section 139(4A)
Every person who is carrying on any business or profession whose total sales, turnover, or gross receipts are or are 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 person 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 which need PAN have become compulsory
- Following are the transactions in which quoting of PAN is mandatory by every person excluding the Central Government, the State Governments and the Consular Offices:
- Sale or purchase of a motor vehicle.
- Opening an account
- Bank Deposit Account
- Creating an application for the issue of a credit or debit card.
- Opening of a Demat account
- Payment in cash of an amount transcending Rs. 50,000 to a hotel or restaurant against the bill at any one time.
- Payment in cash of an amount exceeding Rs. 50,000 in link with travel to any
- foreign country or payment for the purchase of any foreign currency at any one time.
- Payment of an amount exceeding Rs. 50,000 to a Mutual Fund for the 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 cooperative bank.
- Deposits of cash aggregating to more than Rs. 2,50,000 during the period of 09th November 2016 to 30th December 2016 with a banking company, cooperative bank or post office.
- Payment in cash for an amount exceeding Rs. 50,000 during any one day for the purchase of bank drafts or pay orders or banker’s cheques from a banking company or a cooperative bank.
- A time deposit of an amount exceeding Rs. 50,000 or aggregating to more than Rs. 5 lakh
- during a financial year with –
- (i) a banking company or a cooperative 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
- 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 the issuance and operation of pre-paid
- payment instruments issued by the Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007 to a banking company or a cooperative bank or to any other company or organisation. Payment of an amount aggregating to more than Rs. 50,000 in a financial year as a life insurance premium to an insurer
- A contract for the sale or purchase of securities (other than shares) for an amount surpassing Rs. 1 lakh per transaction
- Sale or purchase, by any person, of shares of a company not listed in a recognised stock exchange for an amount exceeding Rs. 1 lakh per transaction. Sale or purchase of any immovable property for an amount surpassing Rs. 10 lakh or valued by stamp valuation authority guided 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 defined above for an amount surpassing Rs. 2 lakh per transaction.
A minor person can quote the PAN of his father or mother or guardian provided he does not have any income chargeable to income tax.
Any person, who does not have a PAN and enters into any of the above transactions, can make a declaration in Form No.60.
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.