All taxpayers in India, are mandatorily required to furnish their Permanent Account Number (PAN). So, it is compulsory to obtain a PAN card because it should be necessarily quoted in all communications with the Income Tax Department.
What is a PAN Card?
The income tax department of India issues a laminated card which states the unique Permanent Account Number (PAN) and other identity details of any person who has applied to obtain a PAN Card.
A PAN number is a unique, 10 digit alphanumeric code that is used to club all transactions of an individual with the IT department. These transactions involve tax payments, TDS/TCS credits, etc.
Structure of a PAN Number
Character(s) of the PAN Number
What does it represent?
First Three Characters
Alphabetical series that run from AAA to ZZZ
It represents the status of a PAN holder. For example, “P” represents an Individual, “F” represents a firm.
Initial letter of the PAN holder’s last name
Next four characters
Numerical series running from 0001 to 9999
An alphabetic check digit
Advantages of a PAN Card
- Necessary for all communications and payments to and from the Income Tax Department of India
To claim a tax refund, pay tax, submit tax deducted at source or tax collected at source, etc. you need to have a unique PAN number.
- Valid Identity Proof
A PAN card qualifies as a valid identity proof all across the country. It contains all important details such as name, date of birth, photograph, signature, etc.
- Enables verification of payments
A PAN card ensures that all of your payments will be clubbed under your PAN number so, it becomes easier to verify your payments.
- PAN card is mandatory for certain financial transactions
PAN card is necessary for certain financial transactions, for example, sale and purchase of vehicles other than two-wheelers, applying for a credit or debit card, opening a Demat account with SEBI, etc.
- Registration of Businesses
An entity such as a company, a firm, a HUF, etc. cannot register their businesses without a PAN card.
Eligibility to apply for a PAN Card
PAN card can be applied by individual, HUFs, companies, institutions, NRIs and anyoner who is liable to pay taxes in India.
Types of PAN Card
- HUF-Hindu undivided family
- Firms or Partnerships
- PAN Card for Individuals – Can be applied through form 49A by any resident of Indian including students and minors.
- PAN Card for Non-Resident Individuals – They too have to submit the form 49A and can be eligible to apply for the same if they pay taxes in India.
- PAN Card for foreign entities paying tax in India – Any company registered outside India but pays taxes in India can avail a PAN Card by filling form 49AA.
- PAN Card for OCI and NRE – Overseas Citizens of India and Non Resident Entities can also apply for a PAN Card through form 49AA
- PAN Card for Indian Companies – Firms and companies can also apply for a PAN Card for tax-related transactions.
Other who can obtain a PAN card?
- An individual
- Association of Persons (AOP)
- Body of Individuals (BOI)
- A company
- A firm
- Hindu undivided family (HUF)
- Local Body
- Artificial Judicial Persons
How to Apply for a PAN Card?
Application for PAN card can be submitted either online or offline.
Offline PAN Application:
Step 1: An applicant needs to download a copy of a PAN card form from the NSDL or UTIITSL website – https://www.tin-nsdl.com/downloads/pan/download/Form_49A.PDF . The same can also be collected from UTIITSL agents.
Step 2: The applicant needs to fill this form and submit the relevant documents to the NSDL office along with a processing fee.
Step 3: The PAN card will be delivered to the address mentioned in the application within 15 working days.
Online PAN Application:
Step 1: Visit the NSDl or UTIITSL website for PAN application online – https://www.onlineservices.nsdl.com/paam/endUserRegisterContact.html
Step 2: Click on “New PAN”
Step 3: Individuals need to fill in PAN form 49A.
Step 4: The applicant needs to deposit a processing fee.
Step 5: The final page will be generated after the payment, and this will consist of a 15-digit acknowledgement number.
Step 6: The acknowledgement form shall be sent to NSDL online along with all relevant documents.
Step 7: Upon verification of the application and documents, the physical card would be dispatched within 15 working days.
Required PAN Card Documents
An individual applicant needs to submit an identity proof (such as Aadhar Card, Voter Id Card, Arm’s Card, Pension card with photograph, Central Government’s Health Scheme Card, etc.), an address proof (such as Aadhar Card, electricity bills, bank statement, voter id card, water bill, postpaid mobile phone bill, driving license, passport, etc.) date of birth proof (such as matriculation certificate, driving license, passport, etc.)
PAN card forms
There are two types of PAN card forms i.e. Form 49A and Form 49AA.
Form 49A: Form 49A is supposed to be filled by Indian nationals. Minors and students can also apply for PAN card by filling form 49A.
Form 49AA: Form 49AA is supposed to be filled by foreign nationals who wish to obtain a PAN card in India. Both the forms contain details like Assessing Officer (AO) code, name, address, e-mail id, phone number, etc. of the applicant.
How to update or edit PAN card details?
The applicant can visit the official website of NSDL and select the update PAN section. Then he must select “correction” and update the details to be changed on PAN card.
A copy of POI or POA documents are required to do the needful
The DO’s and DON’T’s for updating PAN details
- The form must be filled only in capital letters
- All the fields must be properly filled.
- Updating the correct mobile number is mandatory
- Preferable the form should be filed in English but an option to fill in the local language is also provided.
- Important to add salutations to the name
- Complete address should be updated
- Signatures, thumbprints should be thoroughly checked and be done properly
- If there is any kind of misleading information, incorrect information or inconsistency in the form, it will result in a cancellation
What if the PAN card is lost?
In case the Pan card is lost the applicant ca file for a duplicate Pan card online by requesting for the same through the official website of SDL and filling in the form 49A for citizens and 49AA for foreigners. A payment needs to be made online after which the Pan card will be issued within 45 days. The PAN card is valid for a lifetime.
Why does an individual need a PAN Card:
PAN is a unique identification number that enables tax-paying in India and can act as the following
- Mandatory for Filing Taxes
- Proof of Identity
- Eligibility to open and operate Bank Accounts
- Financial transactions
- Proof of Address
- Registration of Business
- Phone Connection
- Gas Connection
- Mutual Funds
Uses of PAN card in Financial Transactions:
- While paying taxes
- When registering a new business
- Financial transactions like:
- Sale or purchase of immovable property above Rs.5 lakh
- Payments made to fulfill travel requirement that is above Rs.25,000
- Sale or purchase of a vehicle besides a two-wheeler
- Payments made towards hotels and restaurants above Rs.25,000
- Payments towards bank deposits of more than Rs.50,000
- Purchase of shares worth Rs.50,000 or more
- Purchase of bonds of more than Rs.50,000
- Purchase of insurance policies of more than Rs.50,000
- Purchase of mutual funds
- Purchase of jewellery of more than Rs.5 lakhs
- To send money out of India.
- Any transfer of funds form NRO or NRE account
What are the consequence if the citizen or tax-payer does not have a Pan Card
- Flat 30% tax on your earnings and wealth,
- The applicant won’t be able to purchase a vehicle, open a bank account, buy an immovable property which is above Rs. 10 lakhs etc.
- Businesses won’t be able to conduct major functions like financial activities and procurement.
How is PAN card allotted?
- PAN center verified and analyses the form which is filled for the applicant of the Pan card.
- assess the application details. The details are further cross-verified by the Assessing Officers against the details of existing PAN Cardholders in the database.
- If there is no record of a previous PAN given to the applicant, then the request is processed.
- A PAN is allotted to a person as per his classification as a taxpayer.
PAN for e-KYC has huge benefits for the applicant and government as well
- The e-KYC process is paperless
- PAN cardholder can share information within minutes, thus eliminating long waiting periods
- Information shared between user and service provider is through secured channels.
- These documents cannot be forged
- Information shared by e-KYC contains authenticated data
- It is legal for the stakeholders involved in the transaction.
- The entire system is paperless making it a cost-effective and time-saving process.