Just like an Aadhar card or a Voter IT Card, a PAN card is one of the most important documents required to perform any major task. While you would, most likely, be familiar with what a PAN card is and how it is used, there are still a few important things that you need to know about a PAN Card.
Continue reading to get a detailed understanding of what a PAN card is, the required eligibility criteria to apply for a PAN card, its types and how you can apply for one.
What is a PAN Card?
PAN is an abbreviation of Permanent Account Number. It is an alphanumeric, 10-digit unique number issued to every taxpayer by the Income Tax Department of India. Each PAN number is different and unique for every individual.
- The PAN number keeps the record of the financial activities of a person and is an integral part of all forms of payments
- By appearance, a PAN card is a physical plastic card that has one’s PAN number written on it along with his/her name, DOB and a photograph
- The PAN number remains valid for a lifetime as it remains unaffected by any change in address or job profile and thus can be used as proof of identity
Structure of a PAN Card
A PAN card is not merely a card with the user’s basic details, but so much more. It is designed in a way that each special character, alphabet, etc. define various different things written on it. Given below is how a PAN card structure can be defined-
- The first five characters in the Permanent Account Number are written in uppercase letters by default and are followed by four numerals whereas the 10th or the last character is a letter. ‘Example- AAA XX123 4B‘
- The very first three characters in the PAN number form an alphabetic sequence
- The 4th character identifies the cardholder type, denoting an individual or a person. For example- BBBPZ123XA
Each cardholder type is defined by the letter given below-
- A- Association of persons (AOP)
- B- Body of Individuals (BOI)
- C- Company
- F- Firm
- G- Government
- H- HUF (Hindu Undivided Family)
- L- Local Authority
- J- Artificial Juridical Person
- P- Individual or Person
- T- Trust (AOP)
- The Fifth character in the PAN Card number is the first character of either of these-
- Surname or last name of the person (in case of “Personal” PAN card)
- Name of the trust, society, entity, organisation (in case the fourth character is from any of the letters- “C”, “H”, “F”, “A”, “T”, “L”, “J”, “G”, “A”
- The 10th or the last character is an alphabetic digit which is meant to verify the current code validity
What are the Types of PAN Cards?
There are various types of PAN cards available, each meant for a different purpose as explained below-
- PAN card for organizations and companies
- PAN card for Cooperative Societies and Trusts
- PAN card for Individual taxpayers
- PAN card for business units or partnership firms
Who is Eligible for a PAN Card?
As per the clauses of the Income Tax Act, Indian residents under the following categories are eligible to hold a PAN card-
- Self-employed professionals or businessmen whose annual turnover is Rs. 5 lakh or more
- Individuals who are liable to pay tax or who pay tax
- Individuals who are into import and export activities
- Registered associations, organizations, trusts
Apart from this, NRIs (Non-Residents of India), PIOs (Person of Indian Origin), OCIs (Overseas Citizens of India), cardholders as well as foreigners who come under the picture of the Income Tax Act of 1961 are eligible to apply for a PAN card. Additionally, parents can apply for a PAN card on behalf of their minor kids.
When is a PAN Card Used?
Apart from the Income Tax Purposes, a PAN Card is used in the following cases-
Proof of Identity
You can use a PAN card as proof of identity apart from an AADHAR card, voter ID card. PAN cards are accepted for several different kinds of financial transactions.
Income tax returns
PAN card is mandatory for individuals and entities who are eligible to file their IT returns.
Income tax returns claim
There are times when the TDS deducted is higher than the actual expected tax to be paid. In such cases, a taxpayer can claim the excess amount by linking the PAN card to his/her bank account.
Open a bank account
You can open a bank account easily by submitting necessary documents like a PAN card.
For property purposes
To buy, rent or sell a property, you need to have a PAN card as proof.
To acquire a loan
You need to submit all the required documents along with your PAN card at the time of the loan application process. Any kind of loan, be it an education loan, personal loan or other, a PAN card is a mandatory document to be submitted.
For fixed deposits
A PAN card is required if you want to invest an amount of more than Rs. 50,000 as a Fixed Deposit. It is required as the bank will deduct TDS on the FD interest amount.
For telephone connections
In case you want to have a new telephone or mobile connection, you need to submit your PAN details with the cellular operators.
To buy jewellery
You need to submit your PAN card details to buy jewellery valued at more than Rs 5,00,000.
If you want to convert your Indian currency into foreign currency, you need to submit your PAN card details to the money exchange intuition.
For investment purposes
If you are planning to invest in securities, you need to submit your PAN details to the concerned authorities for transactions above Rs. 50,000. PAN card detail is applicable for mutual funds, debentures, and equities too.
Purchase of goods & services
One must submit his/her PAN card details for an amount exceeding Rs. 2 lakh per transaction on the purchase or sale of goods & services.
What are the Documents Required to Apply for a PAN Card?
To apply for a PAN card, the following documents must be submitted-
|Individuals||Copy of Passport, Voter ID card, POI/POA, Aadhar card, Driving license|
|Trust||Copy of Trust deed copy or certificate of registration number|
|Companies||Copy of Certificate of Registration issued by Registrar of Companies|
|Hindu Undivided Family (HUF)||Copy of HUF affidavit issued by Head of HUF and POI/POA details, Date of Birth Proof|
|Partnership/Firms||Copy of Certificate of Registration issued by the Registrar of Firms/Limited Liability Partnership and Partnership Deed|
|Society||Copy of Certificate of Registration number from Registrar of Co-operative Society or Charity Commissioner|
|Foreigners||Passport PIO/OCI card issued by Indian Government, Bank Statement of the residential country, Copy of NRE bank statement in India|
How to Apply for a PAN Card?
There are two ways to apply for a PAN card- Online and Offline. Follow the steps written below to apply for a PAN card-
Apply for a PAN Card Online
- Visit the official web portal of NSDL or UTIITSL
- Locate the PAN application form and duly fill it properly
- Submit all the required documents with 2 passport size photographs
- Pay the required fee
- Your PAN card will be dispatched to your registered address within 15 days or according to the applicant’s communication address
Apply for a PAN Card Offline
- Visit the PAN centre
- Fill in the PAN application form with accurate information and submit 2 passport size photographs
- Now, submit all the supporting documents, and processing fees along with the application
- Your PAN card will be dispatched within a span of 15 days from the date of submission