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PAN Card

Whether you are an Indian citizen or an NRI, if you are filing taxes or have financial transactions in India you will almost always need a PAN card.

What is PAN?

A Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department of India. Each set of numbers is unique to the individual, HUF, company, etc. (We will take a closer look at those numbers in a moment.). PAN is a permanent number, is unaffected by a change of address, even between states and is not transferable. It is illegal to own more than one PAN.

The PAN’s primary purpose is to bring a universal identification key factor that links and tracks various documents and information regarding taxes and financial transactions, such as loans, investments, buying and selling real estate and other business activities of taxpayers. By tracking the above it indirectly prevents tax evasion through non-intrusive means.

You can consider this number to be similar to the Social Security Number issued in the United States to USA citizens and other legal residents.

Structure of the PAN

The structure of the new series of PAN numbers is based using Phonetic Soundex code algorithm to ensure that each number is unique. The following list is “constant permanent parameters” that assist in the creation of phonetic PAN (PPAN) number:

  1. Full name of the taxpayer;
  2. Date of Birth/Date of Incorporation
  3. Status
  4. Gender in case of individuals; and
  5. Father’s name in case of individual (including in the cases of married ladies).

    6. The Date of Issue (DOI) of the PAN card can be found on the right hand side of the photo on your PAN card.

       
    The 10 Digit Alphanumerical Sequence

    Let’s take a look at the breakdown of the 10 digit alphanumerical sequence:
    1. The first five fields are called the core fields and are alphabetical in nature.
    2. The first three letters of the core field are an alphabetical series running from AAA to ZZZ.
    3. The forth character of the PAN must be one of the following, depending on the type of assesse:
    C Company
    P Person
    H HUF (Hindu Undivided Family)
    F Firm
    A Association of Persons (AOP)
    T AOP (Trust)
    B Body of Individuals (BOI)
    L Local Authority
    J Artificial Juridical Person
    G Govt

USAGES

  • Sale or purchase of immovable property valued at Rs 500,000 or more. If there are co-owners (buyer or seller), the PAN of both the owners will have to be mentioned. If a nominee holds the property, the PAN of the legal owner must be mentioned.
    The PAN should be disclosed in the document pertaining to purchase or sale of the property.
  • Sale or purchase of a motor vehicle requiring registration other than two-wheelers. This does not include vehicles running on fixed rails or special vehicles for use only in factories or in other enclosed premises or vehicles of less than four wheels with engine capacity of not more than 25 cc.
  • A time deposit of more than Rs 50,000 with any banking company and deposit of more than Rs 50,000 with post-office savings bank. This requirement is not mandatory when investing in post-office National Savings Certificate or Kisan Vikas Patra, and the PAN will be required only if the time deposit exceeds Rs 50,000.
  • Contract of sale or purchase of securities exceeding Rs 1 lakh in value, including shares, bonds, debentures, derivatives, units and government securities.
  • Cash payment of Rs 50,000 or more for purchase of bank drafts, pay orders or bankers cheques during any one day.
  • Cash payment exceeding Rs 25,000 in connection with travel to any foreign country (fare or purchase of foreign currency).
  • Application for installation of telephone, including cellular telephone.
  • Payment to hotels and restaurants against bills exceeding Rs 25,000 at any one time.
  • Opening a bank account.
  • Application for issue of a credit card.
  • A cash deposit of Rs 50,000 or more with any bank during any one day.
  • Payment of Rs 50,000 or more to a mutual fund for purchase of units or to a company for acquiring its shares or to a company/institution for acquiring its debentures/bonds or to RBI for acquiring bonds.
  • Minor intending to open time deposit or bank account should quote the PAN of either father or mother or guardian in whose hands income is likely to be clubbed.