30 Dec 2013

What is Permanent Account Number (PAN)

Permanent Account Number (PAN) is made up of unique alphanumeric (alphabets & numbers) combination issued to all juristic entities identifiable under the Indian Income Tax Act 1961. It is issued by the Indian Income Tax Department under the supervision of the Central Board for Direct Taxes (CBDT) .It is also used as an important identity proof. Quoting of PAN is almost necessary for opening of bank account and many other purposes.
The primary purpose of PAN is to bring a universal identification key factor for all financial transactions and indirectly prevent tax evasion by keeping a track of monetary transactions of high net worth individuals. The PAN is unique, national, and permanent. This unique number remains same even if the person holding PAN changes his address locally or to different state.
The structure of PAN is such that is designed to fulfill section 139A of Income Tax Act.

PAN structure is as follows:

For example take BOFCP2685A as an imaginable PAN.
The first five characters (BOFC) are letters, next 4 numerals (2685), last character letter (A).
The first three letters are sequence of Alphabets from AAA to ZZZ

The fourth character informs about the type of holder of the Card. Income Tax Act, 1961 defines each assesse differently as

C — Company
P — Person
H — HUF (Hindu Undivided Family)
F — Firm
A — Association of Persons (AOP)
T — AOP (Trust)
B — Body of Individuals (BOI)
L — Local Authority
J — Artificial Judicial Person
G — Government

In the above example the PAN is of a company assessee as the fourth character
is C.

The fifth character of the PAN is the First character
(a)   of the surname / last name of the person, in the case of a "Personal" PAN card, where the fourth character is "P" or
(b)   of the name of the Entity/ Trust/Society/ Organization in the case of
Company/ HUF/ Firm/ AOP/ BOI/ Local Authority/ Artificial Juridical Person/ Government, where the fourth character is

Here, the fifth character is P so the name of the company must be starting from character P.

The last character is an alphabetic check digit.

The central government has introduced a new online service called "Know Your PAN" to verify or validate new and existing PAN numbers, which can be done by visiting this website. Failure to comply with the provisions of Section 139A of Income Tax Act, penalty of Rs.10, 000/- for each default is payable u/s.272B by Assessing Officer.

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