Permanent Account Number (PAN) card, is a unique 10-digit alphanumeric identity allotted to each taxpayer by the Income Tax Department under the supervision of the Central Board of Direct Taxes (CBDT).
The main objective of PAN is to use a universal identification key to track financial transactions that might have a taxable component to prevent tax evasion. The PAN number remains unaffected by change of address throughout India.
Why is PAN required?
- For payment of direct taxes
- To file income tax returns
- For applying GST number
- To avoid deduction of tax at higher rate than due
- To enter into specific transaction such as:
- Sale or purchase of immovable property valued at Rs 5 lakh or more
(b) Sale or purchase of a vehicle other than a two wheeler
(c) Payment to hotels or restaurants an amount exceeding Rs 25,000 at a time
(d) Payment in cash an amount exceeding Rs 25,000 in connection with travel to any foreign country
(e) Payment of an amount of Rs 50,000 or more to the Reserve Bank of India for acquiring bonds
(f) Payment of an amount of Rs 50,000 or more to a company or an institution for acquiring bonds or debentures
(g) Payment of an amount of Rs 50,000 or more to a company for acquiring shares
(h) Any mutual fund purchase
(j) Deposit exceeding Rs 50,000 with any single banking institution in 24 hours.
(k) Payment exceeding Rs 5 lakhs for purchase of bullion and jewellery,
Who must apply for PAN Card?
- Anybody who earns a taxable income in India, including foreign nationals who pay taxes here.
- Anybody who runs a business (be it retail, services or consultancy) that had total sales, turnover or gross receipt exceeding Rs 5 lakh in the previous financial year, shall apply for PAN card in India.
How to Apply for PAN Card ?
On submission of the PAN Card application form, it would generally take between 10-15 working days for the PAN card to be issued. Now, however, applicant can receive their PAN card in 2 days. The process is outlined below:
- Visit the NSDL website and select the appropriate form from the options provided.
- Once you have read through the guidelines, select the type of form (with or without Digital Signature Certificate) and type of applicant from the drop down menu and proceed to fill in the details requested.
- After filling in the details and uploaded the relevant documents, submit the form.
- You will receive an acknowledgement in the form of your application number, which you can use to track the status of your application.
You will receive your PAN card through registered post once the details submitted by you have been verified and processed.
PAN Card Structure
A PAN card is made up of 10 alphanumeric characters, with the first 5 characters being alphabets, the next 4 being numbers and the last character being an alphabet.
- The first three character are a sequence of alphabets, which are generally a random sequence.
- The fourth character indicates type of the applicant (such as a firm, individual, company, local authority, etc).
- The fifth character could be any of the following:
- The first character of the applicant’s name or surname if the applicant is an individual
- The first character of the name of company /firm /local authority etc, name.
- The last character is an alphabet.
Details Mentioned in PAN Card
The PAN card being a photo identity document, it contains information relating to the entity it has been issued to, such as:
- The entity’s full name (in case of firms/companies/governments etc, the registered name of the body)
- The date of birth (date of registration in case of companies/firms)
- The PAN number
- In addition to this, the PAN card also mentions the date on which it was issued, if the card was issued by the NSDL.
Once the details submitted for the PAN are verified, the PAN card will be posted to the address of the applicant as stated in the application form. If by chance the PAN card applicant is not available on delivery, he/she can collect their PAN from the area post office. The PAN card will be granted to the PAN card applicant once he/she provides the KYC documents as proof of identity.
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