Whenever you file your tax return or engage in business or personal transactions, one very specific string of letters and numbers will be required of you. This is your PAN or Permanent Account Number, the alphanumeric information which is very unique to your person. Within this string of letters and numbers are important pieces of information that you will use every time you engage in any form of financial and related transactions such as registering a business, opening a bank account, applying for utility services, and many more. Everyone is expected to have their individual PAN and the best way to do it is to apply for your very own PAN Card.
PAN Card Meaning
PAN stands for Permanent Account Number. A PAN Card is thus the physical representation of your PAN which you can present to the Income Tax Department whenever filing for your tax returns. You can also present your PAN Card to legitimate businesses and other services requiring proof of your identification.
The PAN allows for the linking of a multitude of documents into one single piece of digital information. It helps facilitate the easier and more efficient retrieval of information as well as the matching of this information related to investment and business activities. Since the card contains personal information of the cardholder, it can also be taken as a valid proof of one’s identity especially when a transacting agency tries to establish your age with absolute certainty in compliance with the guideline on Know Your Customer protocols.
The institutionalization of a Permanent Account Number is pursuant to Section 139-A of the Income Tax Act of 1961. Because having a PAN is every taxpayer’s responsibility, failure to secure a PAN Card will typically be meted with Rs 10,000 fine.
Who is the PAN For?
The PAN is basically for everyone in India regardless of whether he is a local or a foreigner or an individual or an entity. If the individual or the entity is expected to file a tax return at any given year, then a PAN is required. If the entity or the individual is expected to generate sales or produce turnover or gross receipts valued at not less than Rs 5 Lakhs in any previous year, then PAN is also needed. Anyone who enters into a financial transaction where the presence of PAN is considered an absolute must, then PAN is also needed.
What Does the Alphanumeric Data Stand For?
The PAN Card contains a string of 10 letters and numbers. The first 3 characters are a combination of letters from A to Z. The 4th character pertains to your classification as a taxpayer. As an individual taxpayer you will see a “P” as the 4th character in your PAN. For Association of Persons or AOP the letter “A” is used while Body of Individuals or BOI is denoted by “B”. Companies will have a letter “C” on the 4th character of their PAN while firms will have an “F”. The government will have “G” while undivided Hindu families will have the letter “H” in the 4th character of the PAN. Local authorities have “L” while artificial judicial persons are given the letter “J”. It the letter is “T” this means that the PAN Card holder is an Association of Persons for a Trust.
The 5th character represents the first letter of the surname or family name of the cardholder. In the case of a cardholder being an entity, say a company or a firm or any of the other taxpayer classification, the first letter of the entity name is also depicted as the 5th character on the PAN. The 6th to 9th characters are number combinations from 0001 up to 9999.
The last character in the 10-character alphanumeric PAN is something that is unique since it serves as a security feature which is system-generated. The final character is determined by passing the first 9 characters through a complex algorithm. This makes it quite impervious to fraud as no one knows exactly how the different combinations of the first 9 letters and numbers will be computed.
What Other Information is Contained in the PAN Card?
Aside from your 10-character Permanent Account Number, your PAN Card will also contain other pertinent pieces of information such as your name or the name of the cardholder, your father’s name, and your date of birth. The PAN Card also contains your signature which can be used by various companies and service providers to authenticate your identity in relation to the documents that you may have signed. Your photograph is also present on the card. These pieces of information are very important as they can serve to establish your identity in many situations.
Why Do You Need a PAN?
All Indian nationals, foreigners, and entities doing business in India are required to have their unique Permanent Account Number. This is to make sure that all finance-related transactions are linked to a central data processing system that will help make application processes a lot more efficient, saving you time, and allowing you to enjoy what you paid for at the soonest possible time.
A Permanent Account Number can be useful in the following:
File tax returns
This is the most important use of your PAN Card. If you don’t want a 30% flat tax rate levied against your income, it is important to have your Permanent Account Number. This is regardless of your income tax bracket. The Permanent Account Number is what facilitates the payment of appropriate taxes and arrears as well as other activities related to being a responsible member of society.
Engage in many forms of financial, business, or investment transactions
Buying a candy from your favorite store should not require a PAN, but purchasing an immovable property that is worth at least Rs 5 Lakhs will require you to show your PAN. Additionally, if you buy or sell any type of vehicle except those that have two wheels, you are also required to have your PAN with you. Other situations wherein you will need your PAN include depositing at least Rs 50,000 in a bank, remitting funds outside of the country, purchasing mutual funds, buying bonds that are valued at a minimum of Rs 50,000, and overseas travel expenses in excess of Rs 25,000. If you purchase shares that are valued at not less than Rs 50,000 or even purchasing an insurance policy will require PAN for the said transaction to push through.
Register a business
Hindu Undivided Families, companies, and firms are also required by law to have their own respective PANs if they want their businesses to be duly registered. This is one of the most fundamental requirements for business registration. As such it would be a shame if you have a business that is not duly registered only because of the absence of a PAN.
Open a bank account
The banking industry has already established the protocols for use on its Know Your Customer initiative. Individuals and other entities who wish to open a bank account will be required by the banking institution to show proof of their Permanent Account Number. This is to make sure that you are who you say you are in your bank account application form. Remember that your PAN Card contains your photograph, your complete name, your father’s name, your birthdate, and your taxpayer information which bank officials can use to validate the information you provide them.
Avail of utility services
While not absolutely necessary, some utility companies such as postpaid mobile phone service providers, electric power companies, and internet service providers may ask for your PAN Card as a means of establishing your identity. In many cases however, other identification cards will suffice. Unless the utility company’s list of application requirements specifically calls for a PAN Card, Voter’s ID, driver’s license, and other government-issued valid ID cards will suffice.
How Do I Avail of My PAN Card?
Availing of a Permanent Account Number Card is now made super easy with online services. One can easily access the website of accredited PAN application service providers. This can be done on any computer or even mobile devices that have web browsers. So you can apply for your PAN regardless of where you may be located. Fill out the required information on the online application form. These typically include the name of the applicant, his or her father’s name, the complete residential address, the date of birth, gender, and contact numbers as well as other pertinent information. The payment of the processing fee can also be made online. You will be provided with a 15-digit acknowledgement number. Keep this for your future reference and for making follow-ups with your application.
Supplying the correct information is an important step since the physical PAN Card will be sent to you by courier. If you put the wrong address or even an incomplete address, there is a strong likelihood that you will not be able to receive your physical card.
Get Your PAN Card Today
Your Permanent Account Number is a very important piece of personal information here in India. It helps establish your identity while also facilitating the smoother consummation of financially-related activities. Get your PAN Card today. Simply bring out your computer, fill out our form, and submit it for processing. We’ll have your PAN Card ready in no time. Simply follow this link for a new application or this link to order a replacement.