Importance of PAN Card Details
While the PAN card was introduced with the primary objective of identifying an individual from a taxation point of view, it also serves other purposes.
1.Valid Identity and Photo Proof: A PAN card is accepted and produced as a legitimate ID proof across the country for various purposes such as for an application for a passport, ration card, voter ID card, utility connection such as gas and electricity etc.
2. At the place of employment: Employers require the PAN details of their employees for the purpose of taxation. Employers need to deduct necessary taxes such as TDS, Professional Tax etc. They also require the PAN card details to show their payments to employees, in the form of salary income, at the time of filing their Income Tax returns.
3. Dealings with Banks: One of the pre-requisites while opening a Bank Account or to avail any kind of financial services is the individual’s PAN Card. This is true irrespective of the type of Bank – Public, Private, Co-operative, etc. In an attempt to eradicate money laundering and black money, banks are required to keep a check on all high-value cash transactions and report to the RBI as the prescribed norms, on a periodic basis. Any cash deposit exceeding Rs. 50,000 with a single banking institution in one day requires the PAN details to be furnished. Also, at the time of opening a Fixed Deposit, whose value is equal to or more than Rs. 50,000, the PAN details are required. This is so because the banks are liable to deduct TDS on the interest earned on such FDs.
After the demonetization drive in November 2016, an amendment was made in the Income Tax rules and all banks were asked to procure and link PAN or Form 60 (In cases where PAN was unavailable) to all the existing bank accounts. The only exception being zero balance saving accounts or Basic Savings Bank Deposit Accounts (BASDA) and the accounts under the recently started financial inclusion program – Pradhan Mantri Jan Dhan Yojana (PMJDY). This activity was to be completed by February 2017.
Also, the government has ensured that individuals resorting to fraudulent practices such as making multiple deposits of amounts less than 50,000 to escape compliance with statutory provisions, will also be tracked and dealt with accordingly.
4. Post Office Deposits: Similar to the FDs with Banks, PAN Card is a mandatory requirement while opening a deposit of Rs. 50,000 or more with the Post Office Department as well.
5. Foreign currency exchange: For foreign travels, in order to get money exchanged for foreign currencies, along with a copy of the visa, tickets, passport, etc, travelers need to provide a copy of the PAN Card as well.
6. Share Trading: PAN details need to be furnished to the brokers along with the Demat and Trading account provider, for the purpose of trading of shares.
7. Mutual Funds and other securities: Similar to share trading, any request to open mutual fund investments or investment in debentures, bonds etc. need to be supported with the PAN details of the investor.
8. Property Transactions: Both the buyer as well as the seller need to provide their PAN details at the time of the registration of the property as well as for finalizing the sales deed. In a case of a property with joint ownership, it is mandatory to quote the PAN details of both the owners. Any transaction related to sale or purchase of an immovable property requires the PAN details when the value of such deal is or exceeds Rs. 5 Lakhs.
9. Credit or Debit Card: PAN details are a mandatory pre-requisite for the application of Credit as well as Debit Cards. The card applications cannot go ahead without this detail and will get rejected. Such rejections also have a negative bearing on the credit score of an individual as well as can create a problem in the future for application of loan, etc.
10. Loan Applications: All loan applications such as personal loan, home loan, etc. require the PAN details of the requestor to be provided.
11. Payment Wallets: In this age of demonetization, payment wallets have gained a significant place in the way monetary transactions are done. Various payment wallets such as Paytm, Mobikwik, etc. require this detail to be shared for their KYC purposes, if the user wants to make transactions beyond the specified limit of Rs. 20,000 per month.
12. Purchase of Vehicle: For all vehicle transactions (sale or purchase) excluding two- wheelers, which fall under the ambit of registration as per the Act for Motor Vehicles, require the PAN details to be shared.
13. Payment of insurance premium: It has been instructed by the Central Board of Direct Taxes (CBDT) that the policyholder needs to provide his / her PAN details at the time of paying the premium to the insurance companies, for amounts more than Rs. 50,000 in a particular year.
14. Jewelry purchase: Buyers need to furnish their PAN details at the time of making jewelry or bullion purchases for amounts exceeding Rs. 5 Lakhs.
PAN Card Composition
Similar to DNA, the Permanent Account Number needs to be unique for each individual or holder. While there is still a one in 70 trillion chance of DNA being common, a PAN needs to be exclusive to only the holder. In order to create this required uniqueness, as per the new series, the Permanent Account Number is arrived at by using the Phonetic Soundex Code algorithm. The combination is based on following the permanent particulars such as Full name, date of birth or incorporation and type or status of the holder. For individuals, factors like gender and father’s name (even for married females) are also taken into account. The PAN Card is a 10 digit alphanumeric number. This intricate combination of alphabets and numbers in a particular format enables the Income Tax department to get crucial information about the account holder in a simple yet.
The composition is :
- The first three characters of the PAN are alphabets. They are a combination of letters and are allocated randomly.
The 4th character of the PAN provides a lot of information about the PAN Holder. It is one of the following depending upon the status of the assessee:
- A – Association of Persons (AOP)
- B – Body of Individuals (BOI)
- C – Company
- E – Limited Liability Partnership
- F – Firm
- G – Government
- H – Hindu Undivided Family
- J – Artificial Judicial person
- L- Local Authority
- P – Person
T – Trust
- The 5th character in the PAN is derived from the first character of the individual’s last name. For non-individuals, it is derived from the first character of the PAN holder’s name. For example, if the name of the person is Sunita Kumar, then the fifth letter will be “K”
- The 6th-9th characters are numeric in nature and are randomly selected from a running number series. The sequence is 0001 to 9999
- The 10th character is an alphabet and is derived from a formula which accommodates the first nine digits.
Eligibility for Holding PAN
As per Section 139A (1), the following are required to have a Permanent Account Number
- All individuals whose total income exceeds the starting point of the Income Tax slabs. This also individuals whose income is chargeable to tax on behalf of others such as the income of the parents which also includes the earnings of the minor's child, etc.
- Charitable trusts required to file returns, as per Section 139(4A)
- Individuals running a business/profession wherein the total sale or income is likely to go beyond Rs. 5 Lakhs
- Importer/exporter who needs to obtain Import Export code
- Anyone who will receive payments post TDS collection
- Anyone who is required to pay excise duties.
- Anyone who issues invoices under Rule 57AE
- Anyone who has a responsibility to pay service tax and his/her agent
- Persons registered under the Central Sales Tax Act or the general sales tax law of the relevant state or union territory
Any individual who wishes to participate in any financial transactions which mandate furnishing of PAN details:
- A person who is not covered in any of the above categories can also apply for a PAN Card voluntarily.
- According to Sec 160, a minor, non-resident, court of wards and anyone defined by law as “an idiot or a lunatic”, can also apply for a PAN. In such cases, the application has to be made by a Representative Assessee, on the behalf of such applicant.
Documents required for PAN Application
For an individual (Indian Citizen), he/ she needs to provide 3 documents along with the application form for PAN Card. These documents should contain (i) Identity Proof (ii) Address Proof (iii) Proof for Date of Birth.
Documents that can be submitted for Identity Proof:
2. Aadhar Card *
3. Driving License *
4. Voter Identity Card *
5. Ration Card with the applicant’s photograph
6. Arms License
7. Health Scheme Card issued by Central Govt
8. Contributory health-scheme card for ex-serviceman
9. Pension Card containing the applicant’s photograph
10. Original copy of Identity Certificate that has been vetted and attested by an MP / MLA / Municipal Councilor / Gazetted Officer
11. Any photo ID proof that was given by the Central / State Government or by any Public Sector undertaking
12. Original copy of Bank certificate. It should contain the applicant’s attested photograph along with the bank details
In addition to the documents marked with (*), the following documents can also be provided as address proofs: Bank Account statement, Credit Card Statement, utilities bill such as landline, gas or electricity, Spouse’s passport, Passport issued by Post Office, recent property tax assessment papers, property registration document and Accommodation allotment letter given by Central / State Govt. (not more 3 years old)
For DOB proof, any of the above-mentioned documents that contain the applicant’s birthdate information can be submitted. Additionally, the following documents that can be submitted for DOB Proof
- Birth Certificate
- Marriage Certificate
- Matriculation Certificate
- Government issued Domicile certificate
- Order for Pension payment
- Affidavit signed and sworn, in front of a magistrate which mentions the DOB
For foreign citizens, they can submit the copy of passport, PIO (Person of Indian Origin) Card, OCI (Overseas Citizen of India) Card or any national or citizenship identification number that has been issued by Indian embassy or High Commission or any such competent authority.
For their address proof, in addition to the above-mentioned documents they can provide the Bank or NRE Statement of India, Visa, appointment or contract letter given by an Indian employer, Residential permit as given by the police authorities and certificate of registration given by Foreigner’s Registration Office.
For other entities, the acceptable documents include Registration Certificate or partnership deed or trust deed, whichever is applicable.
Some other guidelines:
- For minors, the address and identity proof of any one of the parents or guardian will be treated as minor’s proof as well.
- In case of an HUF, the documents to be provided include any of the above-mentioned documents of the Karta along with an affidavit prepared by the Karta with the details of the coparceners.
Process for PAN Application
There are two ways of applying for a PAN Card.
- Visit https://tin.tin.nsdl.com/pan/index.html or http://www.myutiitsl.com/PANONLINE/
- For new PAN Card application, Form 49A needs to be used. After filling in the required details and successfully submitting the same, the applicant will receive an acknowledgement for confirmation of the application being made properly. This will contain a 15-digit number. This acknowledgement is required to be saved and printed for completing the next steps of the process.
- The fees (including service tax) for new PAN Card Application is Rs. 107(if the communication address of the prospective cardholder is in India) or else Rs. 994. While payments for Rs. 107 can be made via cheque, demand draft, internet banking or debit/credit cards, the same for PAN Card applications addressed to outside India can be made only through demand drafts.
- The applicant then needs to affix two recent color passport photographs on the above-mentioned acknowledgement copy and along with the necessary signatures (or impression of left hand thumb) and supporting documents (ID Proof, Address Proof, Proof of Date of Birth and proof of payment of the PAN Card fees) send to the Income Tax Department.
- The application needs to necessarily reach the Income Tax Office within 15 days from the date of submitting the online application.
- The PAN Card is sent directly by the government to the address as mentioned by the applicant in the form.
The process of changing or correcting the details of your existing PAN card is similar to the above-mentioned process. At the home page of the Income Tax PAN Services Unit, the applicant will need to select "Changes or Correction in PAN details"
2. Offline : PAN Card application can also be made offline or through the traditional method of “paper application”. The form to be filled is the same as the online method – Form 49A. The concerned person needs to be fill in the requisite details in Form 49A and submits it to along with a copy of the supporting documents, photograph and processing fees, to an NSDL OR UTITSL Pan service centre. (The details regarding the location of these centres can be attained from the local NSDL or UTITSL or Income Tax Office in that city or from their websites.)
The official at the PAN facilitation center will hand over a copy of acknowledgement to the person, which can be used for future reference purposes.
For individuals who are not citizens of India or entities formed or incorporated outside Indian territories, Form 49AA needs to be filled in, for PAN application.
In case the applicant is an Indian unregistered company (Not registered under Companies Act), the application for PAN may be done by filling in Form INC-7.
Validity of PAN
PAN once obtained remains valid, throughout India, for the lifetime of the cardholder or applicant. It is not impacted by changes in marital status, address, etc.
(For female applicants, irrespective of their marital status, only father’s name needs to be provided in the PAN Application details.)
However, if there are any changes in the details provided at the time of PAN Application such as change in name, change in father’s name etc., it should be informed to the Income Tax Department by providing the new details in the “Request for New PAN Card Or/ And Changes or Correction in PAN Data” form.
Tracking of PAN
After submitting the PAN application, applicants can check the progress of the application. The status is available on the Income Tax department – www.incometaxindia.gov.in or NSDL – www.tin-nsdl.com or UTITSL – www.utiitsl.com websites.
Online Verification of PAN
The Income Tax department has provided a facility wherein one can know or verify the PAN details. This is known as “Know your PAN’ or “PAN Verification”.
Steps for the same:
Individual PAN details
- Visit the website of Income Tax department and go to the “Know Your PAN” section.
- Enter the basic details of the PAN cardholder. For instance, Date of Birth (for individuals) or Date of Incorporation (for entities) and Full Name.
- If the details provided correctly match with the Income Tax Department’s database, the PAN linked with the mentioned details will be displayed. Along with the number, other details such as jurisdiction of the holder, status (active / inactive) will also be shown.
Bulk Verification – Government and Non-Government agencies
- To avail this facility, the concerned agencies need to register themselves as a Bulk Verification agency with the Income Tax department. Once registered they can upload multiple queries at one go, in the format specified by the IT Department and get the desired results.
There is also a paid service available for certain approved government and private bodies
Penalty for non-compliance
If any individual or entity, who is required to obtain PAN:
(i) but has not done the needful or,
(ii) has knowingly furnished incorrect PAN details:
a. in any transaction wherein PAN details are mandated by law
b. to a person who is entitled to collect tax at source will be liable to be penalized under Section 272B of the Income Tax Act. The amount of penalty in this case would be Rs. 10,000 for each such default.
Also, the same section also mentions that a similar amount of penalty can be levied on any person or entity that holds multiple PAN Cards. If any person or entity has been erroneously allotted more than one PAN Card, then he/she should surrender the additional PAN card(s) to the Income Tax Department, immediately.