All you need to know PAN (Permanent Account Number)

All you need to know PAN (Permanent Account Number)

What is PAN?

Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department, to any “person” who applies for it or to whom the department allots the number without an application.

Registering for PAN makes you a user under the Income tax Act and it enables you to file your income tax return and other income tax services.

PAN was introduced to facilitates linking of various documents, including payment of taxes, assessment, tax demand, tax arrears etc. relating to an assessee, to facilitate easy retrieval of information and to facilitate matching of information relating to investment, raising of loans and other business activities of taxpayers collected through various sources, both internal as well as external, for detecting and combating tax evasion and widening of tax base.

Who should obtain PAN?

  • Every person if his total income assessable during the year exceeds the maximum amount which is not chargeable to tax.
  • A charitable trust who is required to furnish return under Section 139(4A)
  • Every person who is carrying on any business or profession whose total sale, turnover, or gross receipts are or is likely to exceed five lakh rupees in any year
  • Every importer/exporter who is required to obtain Import Export code
  • Every person who is entitled to receive any sum/income after deduction of tax at source
  • Any person who is liable to pay excise duty or a producer or manufacturer of excisable goods or a registered person of a private warehouse in which excisable goods are stored and an authorized agent of such person
  • A person who is liable to pay the service tax and his agent
  • Persons registered under the Central Sales Tax Act or the general sales tax law of the relevant state or union territory
  • Every person who intends to enter specified financial transactions in which quoting of PAN is mandatory

Demystifying PAN

A typical PAN looks like “AFZPK7190K”

First three characters i.e. “AFZ” in the above PAN are alphabetic series running from

AAA to ZZZ

Fourth character of PAN is of utmost importance as it indicates the status of the person holding PAN

Here’s what it indicates!

“P” in the above PAN represents the status of the PAN holder.

  • “P” stands for Person-Individual
  • “F” stands for Firm like Partnership, LLP
  • “C” stands for Company I.e. Private limited company, public limited company and one person company
  • “H” stands for HUF- Hindu Undivided Family
  • “A” stands for AOP- Association of persons
  • “T” stands for TRUST etc.

Fifth character i.e. “K” in the above PAN represents first character of the PAN

holder’s last name/surname.

Next four characters i.e. “7190” in the above PAN are sequential number running from 0001 to 9999.

Last character i.e. “K” in the above PAN is an alphabetic check digit.

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