Permanent Account Number (PAN)

Covered Aspects of PAN

Understanding PAN

PAN is a unique alphanumeric number consisting of ten digits issued by the Income Tax Department. It is typically issued as a laminated plastic card, commonly known as a PAN card. Let's discuss the structure of the ten characters in PAN using the following example:

The first three characters represent the alphabetic series from AAA to ZZZ. The fourth character signifies the status of the PAN holder, such as:

  • "P" for Individual
  • "C" for Company
  • "H" for Hindu Undivided Family (HUF)
  • "A" for Association of Persons (AOP)
  • "B" for Body of Individuals (BOI)
  • "G" for Government Agency
  • "J" for Artificial Juridical Person
  • "L" for Local Authority
  • "F" for Firm/Limited Liability Partnership
  • "T" for Trust

The fifth character represents the first character of the PAN holder's last name/surname for individuals or the first character of the PAN holder's name for non-individuals.

The next four characters are sequential numbers ranging from 0001 to 9999.

The tenth and final character is an alphabetic check digit.

Utility of PAN

PAN enables the Income Tax Department to identify and link all transactions of the PAN holder. This includes tax payments, TDS/TCS credits, income tax returns, specified transactions, and correspondence. It facilitates easy retrieval of information about the PAN holder and helps match various investments, borrowings, and other business activities associated with the PAN.

Who Needs to Obtain PAN?

PAN is required by:

  • Individuals if their total income or the total income of another person they are assessable for exceeds the non-taxable limit.
  • Charitable trusts filing returns under Section 139(4A).
  • Individuals engaged in business or professions with total sales, turnover, or gross receipts expected to exceed five lakh rupees in any year.
  • Individuals intending to enter specified financial transactions where PAN is mandatory.
  • Non-individual resident persons and their associated individuals engaging in financial transactions exceeding Rs. 2,50,000 during the financial year.

Transactions Requiring PAN

Quoting PAN is mandatory for various transactions, excluding Central Government, State Governments, and Consular Offices. These include:

  1. Sale or purchase of motor vehicles (excluding two-wheelers).
  2. Opening accounts (excluding time-deposits and basic savings accounts) with banking companies or co-operative banks.
  3. Applying for credit or debit cards.
  4. Opening a demat account with a depository, participant, or custodian of securities regulated by SEBI.
  5. Cash payments exceeding Rs. 50,000 to hotels or restaurants.
  6. Cash payments exceeding Rs. 50,000 for foreign travel or purchasing foreign currency.
  7. Payments exceeding Rs. 50,000 to Mutual Funds for purchasing units.
  8. Payments exceeding Rs. 50,000 to companies or institutions for acquiring debentures or bonds.
  9. Payments exceeding Rs. 50,000 to the Reserve Bank of India for acquiring its bonds.
  10. Cash deposits exceeding Rs. 50,000 in a day with banking companies or co-operative banks.
  11. Deposits aggregating to more than Rs. 2,50,000 between 9th November 2016 and 30th December 2016 with banking companies, co-operative banks, or post.
  12. If you deposit 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 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. If you make a 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. If you pay an amount aggregating to more than Rs. 50,000 in a financial year as a life insurance premium to an insurer.
  15. If you enter into a contract for the sale or purchase of securities (other than shares) for an amount exceeding Rs. 1 lakh per transaction.
  16. If you sell or purchase shares of a company not listed in a recognized stock exchange for an amount exceeding Rs. 1 lakh per transaction.
  17. If you sell or purchase any immovable property for an amount exceeding Rs. 10 lakh or valued by a stamp valuation authority referred to in section 50C of the Act at an amount exceeding ten lakh rupees.
  18. If you sell or purchase goods or services of any nature other than those specified above for an amount exceeding Rs. 2 lakh per transaction.

NOTE:

  1. A minor person can quote the PAN of his father, 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 the above transactions can make a declaration in Form No.60.
  3. Quoting of PAN is not required by a non-resident in a transaction referred to at point No. 3 or 5 or 6 or 9 or 11 or 13 or 18.
  4. Any person who has an account (other than a time deposit referred to at point no. 12 and a Basic Saving Bank Deposit Account) maintained with a banking company or a co-operative bank 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 (Permanent Account Number)

To apply for a PAN (Permanent Account Number), follow these steps:

  1. Authorized PAN Service Centers: The Income Tax Department has authorized UTI Infrastructure Technology and Services Limited (UTIITSL) and National Securities Depository Limited (NSDL) [now protean] to establish and manage PAN Service Centers. These centers are available in major cities across India. For the purpose of this guide, these centers will be referred to as PAN application centers of UTIITSL/Protean.
  2. Visit a PAN Application Center: If you wish to obtain a PAN, visit a PAN application center of UTIITSL or Protean. These centers have been established by UTIITSL and NSDL [now protean]. They provide assistance in the PAN application process.
  3. PAN Application Form: Obtain the PAN application form (Form 49A/49AA) from the PAN application center. This form is required to apply for a PAN.
  4. Gather Required Documents: Collect the necessary documents as per the requirements stated in the PAN application form. These documents usually include proof of identity, proof of address, and proof of date of birth.
  5. Pay the Prescribed Fees: Submit the PAN application form along with the required documents and the prescribed fees at the PAN application center of UTIITSL or Protean. The fees can vary and are mentioned in the application form.
  6. Online Application: Alternatively, you can also apply for PAN online through the official website of UTIITSL or Protean. Visit their website and follow the instructions to fill out the online PAN application form. Make sure to attach scanned copies of the necessary documents as specified on the website.
  7. Quoting Aadhaar Number: According to Section 139AA, every eligible person who possesses an Aadhaar card is required to provide their Aadhaar number in the PAN application form. This rule has been in effect since the 1st of July, 2017. If you have applied for an Aadhaar card but have not received it yet, you can provide the Enrolment ID of the Aadhaar application form instead.
  8. Exceptions to Quoting Aadhaar Number: The provisions of Section 139AA do not apply to individuals who fall under the following categories: i) Residing in Assam, Jammu and Kashmir, or Meghalaya. ii) Non-residents as per the Income-tax Act, 1961. iii) Individuals who are 80 years of age or older at any time during the previous year (super-senior citizens). iv) Individuals who are not citizens of India.

By following these steps, you can successfully apply for a PAN. Ensure that you provide accurate information and complete all the required formalities at the PAN application center or through the online application process.

Therefore, it is no longer mandatory for individuals (as mentioned earlier) to provide their Aadhaar Number when filling out the PAN application form.

If the applicant is a company not registered under the Companies Act, 2013, they can apply for a Permanent Account Number by using the Spice-INC-32 form as specified in sub-section (1) of section 7 of the aforementioned Act for the purpose of company incorporation.

For PAN application, resident individuals should use form 49A, while non-resident individuals, including foreign companies, should use form 49AA.

Individual applicants must affix two recent colored photographs (sized 3.5 cms x 2.5 cms) to the PAN application form.

To complete the application process, the applicant must provide prescribed documents as proof of their identity, address, and date of birth.

The PAN application form should include the designation and code of the relevant Assessing Office of the Income Tax Department.

The address, phone numbers, and other relevant details of the PAN application centers operated by UTIITSL or Protean, where PAN applications can be submitted, can be obtained from the following sources:

• Income Tax Department website: www.incometaxindia.gov.in

• UTIITSL website: www.utiitsl.com

• Protean website: https://www.protean-tinpan.com/


Instant PAN

The Income-tax Department has introduced a new feature on the e-filing portal, enabling the allotment of a PAN (Permanent Account Number) to the taxpayer based on their Aadhaar Number. However, to utilize this facility, certain conditions must be met:

a) The taxpayer must not have been previously allocated a PAN. b) The taxpayer's mobile number must be linked to their Aadhaar number. c) The taxpayer's complete date of birth should be available on the Aadhaar card. d) The taxpayer must not be a minor at the time of PAN application.

To obtain an instant PAN using this functionality, follow the steps below:

1. Visit the official website: https://eportal.incometax.gov.in/iec/foservices/#/pre-login/instant-e-pan and locate the "Get New e-PAN" option.

2. Provide your 12-digit Aadhaar number for PAN allocation and proceed by clicking "continue."

3. Verify the Aadhaar details by entering the One-Time Password (OTP) received on the mobile number linked to your Aadhaar.

4. Fill in the required personal information and submit the application to obtain the e-PAN. Ensure that no step or topic is overlooked.

By adhering to these guidelines, you can easily obtain an instant PAN using the newly launched functionality on the Income-tax Department's e-filing portal.

How To correct any mistake in your PAN card or notify any changes in the PAN data,

you need to follow the steps outlined below:

1. Requesting Reissue of Lost PAN Card or Change/Correction in PAN Data: The application for reissue of a lost PAN card or for changing/correcting PAN data should be filed using the form titled "Request for New PAN Card Or/And Changes Or Correction in PAN Data."

2. Changes or Correction in PAN Data: If you need to make changes or corrections in your PAN data, ensure that you fill in all the mandatory fields in the form. Additionally, select the corresponding box on the left margin of the appropriate field where the correction is required.

3. Reissuance of PAN Card without Changes in PAN Data: In case you are applying for a reissued PAN card without any changes in your PAN-related data, fill in all the fields in the form but do not select any box on the left margin.

4. Updating Address for Communication: Whether you are requesting a change/correction in PAN data or a reissued PAN card without changes, the address for communication will be updated in the ITD (Income Tax Department) database. Make sure to provide the address for communication in the application.

5. Cancellation of PAN: If you wish to cancel your PAN, complete all the mandatory fields in the form. Enter the PAN to be canceled in the appropriate column of the form and select the checkbox on the left margin. Note that the PAN to be canceled should not be the same as the PAN (the one currently used) mentioned at the top of the form.

By following these steps, you can correct any mistakes in your PAN card or intimate any changes in the PAN data. Make sure to provide accurate and complete information in the application form.


Holding multiple PAN cards is prohibited.

It is not permissible for an individual to possess more than one PAN card. If found in violation of this rule, a penalty of Rs. 10,000/- may be imposed under section 272B of the Income-tax Act, 1961. In the event that an individual has been issued multiple PAN cards, it is mandatory to promptly surrender the additional PAN card(s). In case of a lost PAN card or forgotten PAN number, the "Know Your PAN" feature provided by the Income Tax Department can be utilized to retrieve the PAN. To avail this facility, one can visit the official website of the Income Tax Department at www.incometaxindia.gov.in. By entering their core details such as Name, Father's Name, and Date of Birth, an individual can ascertain their PAN online. Once the PAN is known, an application for a duplicate PAN card can be made by submitting the "Request for New PAN Card Or/And Changes Or Correction in PAN Data" form.

Linking of PAN with Aadhaar Number

The requirement of linking the PAN (Permanent Account Number) with the Aadhaar Number was introduced through the Finance Act of 2017. This act added Section 139AA to the Income-tax Act of 1961, which mandated that individuals eligible to obtain an Aadhaar number must quote it while applying for PAN or while filing their income tax returns. This requirement came into effect from July 1, 2017.

If an individual does not possess an Aadhaar number but has applied for an Aadhaar card, they can mention their Aadhaar Enrolment ID in the Income Tax Return (ITR) instead.

Section 139AA further states that individuals who already hold a PAN as of July 1, 2017, and are eligible to obtain an Aadhaar number must intimate their Aadhaar number to the Income-tax Department on or before March 31, 2021. Failure to comply with this requirement would result in the PAN becoming inoperative after the specified date.

The Central Board of Direct Taxes (CBDT) has issued a notification stating that all the consequences outlined in the Income-tax Act for not furnishing, intimating, or quoting PAN shall come into effect from April 1, 2023, if the PAN becomes inoperative due to non-linking with Aadhaar. However, it is important to note that taxpayers are liable to pay a fee if their PAN is linked with Aadhaar between April 1, 2022, and March 31, 2023.


Consequences of Not Linking PAN with Aadhaar Number

The Central Board of Direct Taxes has introduced Rule 114AAA, outlining the procedure and consequences when PAN (Permanent Account Number) becomes inoperative. According to Rule 114AAA(2), if a person's PAN becomes inoperative, it will be considered as if they have not furnished, intimated, or quoted their PAN. Consequently, they will be held liable for all the consequences specified under the Act for not complying with PAN requirements. However, individuals can reactivate their PAN by subsequently linking it with their Aadhaar number through intimation to the Department.

Penalty for Default in Intimating Aadhaar Number

The Finance Act of 2021 has introduced Section 234H, which imposes a fee for defaulting in intimating the Aadhaar number. If an individual is required to intimate their Aadhaar number under Section 139AA but fails to do so, they will be liable to pay a fee, as prescribed, not exceeding Rs. 1,000 at the time of making the intimation. The Central Board of Direct Taxes, through notification No. 17/2022 dated 29-03-2022, amended Rule 114 to specify the fees to be levied if Aadhaar is not linked with PAN. As per Rule 114(5A), if a person intimates their Aadhaar number after the due date, they will be liable to pay a fee of Rs. 500 if the intimation is made between 01-04-2022 and 30-06-2022, and Rs. 1,000 in all other cases.

Methods to Link Aadhaar Number with PAN

The following methods have been prescribed to link the Aadhaar number with PAN:

(a) SMS: Send an SMS to 567678 or 56161 from your registered mobile number in the following format: UIDPAN<SPACE><12 Digit Aadhaar Number><SPACE><10 Digit PAN>. For example, send UIDPAN 123456789000 EPOPE1234E.

(b) Online:

• Visit the website of the PAN service providers such as www.protean-tinpan.com or www.utiitsl.com. Click on the 'Link Aadhaar to PAN' button, which will redirect you to the income-tax website.

• Alternatively, visit the e-filing website directly at www.incometaxindiaefiling.gov.in.

(c) Paper mode: File a one-page form along with a minimal fee at the designated PAN center. Furnish copies of your PAN card and Aadhaar card.

Interchangeability of PAN and Aadhaar for Income Tax Purposes

Section 139A of the Income-tax Act, 1961, outlines the conditions under which an assessee is required to obtain PAN. PAN must be mentioned in all communications with the Income-tax Department and when entering into specified financial transactions. However, there may be situations where a person involved in high-value transactions, such as purchasing foreign currency or making significant withdrawals from banks, does not possess a PAN. To address this, the Finance (No. 2) Act, 2019, allows for interchangeability of PAN with Aadhaar. It is stated that individuals who are required to furnish, intimate, or quote their PAN under the Income-tax Act and:

• Have not been allotted a PAN but possess an Aadhaar number, may furnish, intimate, or quote their Aadhaar in place of PAN. The Income-tax Department will then allot PAN to such individuals through the prescribed procedure.

• Have been allotted a PAN and have linked their Aadhaar number with PAN as per Section 139AA, may furnish their Aadhaar number instead of PAN for all transactions where quoting PAN is mandatory as per the Income-tax Act.

Penalty for Non-Compliance with PAN or Aadhaar Provisions

Section 272B of the Income-tax Act provides for penalties in case of non-compliance with provisions relating to PAN, including failure to obtain, quote, or authenticate PAN. The penalty amount for each default is Rs. 10,000. As the Finance (No. 2) Act, 2019 allows for the interchangeability of Aadhaar with PAN, consequential amendments have been made in Section 272B to impose a penalty of Rs. 10,000 for each default in the following cases:

• Failure to quote or intimate PAN or Aadhaar, or quoting or intimating an invalid PAN or Aadhaar.

• Failure to quote or authenticate PAN or Aadhaar in specified transactions.

• Failure of the receiver (e.g., banks, financial institutions, etc.) of documents related to specified transactions to ensure that PAN or Aadhaar are duly quoted and authenticated.