A PAN or Permanent Account Number is the laminated card with a ten-digit alphanumeric number issued by the Income Tax Department of India. It is provided to any individual who applies for it with valid documents.
PAN helps the IT department link all financial transactions carried out by a person with the department.
Why was PAN Card Introduced?
PAN card was introduced by the IT department to link different documents related to payment of taxes, tax arrears, tax demand, etc. related to an assesse. This helps one easily retrieve call information related to a person’s financial transactions as well has help facilitate in acquiring information related to investments, raising of loans, etc. It also includes collection of tax payers activities that are both internal and external and detection of any attempt to evade tax and widening the tax base.
What do the Alphanumeric Characters on a PAN Card Stand for?
The alphanumeric characters printed on a PAN card has certain meaning. The first 3 characters run in the alphabetic series from AAA to ZZZ. The fourth character of the PAN stands for:
P – Individual
F – Firm
C – Company
H – HUF
A – AOP
T – Trust, etc.
The next character that is, the fifth character is related to the PAN holder’s last name or surname. The next four characters, that is, the numbers are sequential numbers that run from 0001 to 9999. The last character is the alphabetic check digit.
Why is it Important to have PAN Card?
PAN is mandatory to be quoted when filing for return of income and when carrying out any correspondence with any Income Tax authority. PAN is necessary to be quoted for documents related to the following financial transactions:
- Making a deposit that exceeds 50 thousand rupees with a bank.
- Making a deposit that exceeds 50 thousand rupees with a Post Office Savings Bank account.
- Opening a new bank account.
- Making a contract of a value exceeding one lakh rupees for sale or purchase of securities.
- Sale or purchase of a motor vehicle or vehicle that does not include a two-wheeler with a detachable side car.
- Making a tome deposit that exceeds over 50 thousand rupees with a bank.
- Payment to hotels or restaurants against a bill that exceeds more than 25 thousand rupees at a time.
- Payment in cash when travelling to a foreign country with an amount that exceeds 25 thousand rupees at one time.
- Payment in cash for purchasing bank drafts or banker’s cheque or pa orders for an amount that aggregates to 50 thousand rupees or more during a single day.
- Depositing cash that exceeds 50 thousand rupees with a bank during one working day.
This is all about what is a PAN card and why it is necessary. Make sure you apply for a PAN card at an earliest, as it is very important to complete financial transactions today.
You May Like to Read
How to know pan card details using PAN number
Documents Accepted for PAN Card Application
What is Form 60 for PAN Card?
How to verify pan card number