Permanent Account Number (PAN) – Full Form, PAN Card Meaning, Importance

Permanent Account Number (PAN) - What is PAN Card, Importance

Jul 04, 2024

5 min

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Having a PAN card is necessary when you are an Indian citizen and are contributing to its economy. The government had introduced this card under the Income Tax Act’s Section 139A. The card was introduced to improve and counter the several disadvantages of the General Index Register Number (GIR) system that was used before PAN. Now, this card provides a unique identification number to every tax-paying entity in the country. Using this method, the individual's tax-related information is recorded against a single number, which is now the primary key for storing information.

Understand what is PAN and why it's so important through the guide we have curated below. Learn about who should get this card and how you can apply for it.

What is a PAN?

The PAN full form is Permanent Account Number which is a ten-digit unique identification number that is provided to an entity by India’s Income Tax Department. The income tax department tracks all tax-related information of an individual or an entity against his unique PAN number.

What is a PAN Card?

PAN card stands for Permanent Account Number Card is a physical card that represents your PAN and has your information, such as your name, photograph, spouse’s or father’s name, and date of birth. You can use the copies of this card as a date of birth or proof of identity.

PAN Card Number Format

The First five characters are alphabetic characters, the next four characters are numbers and the last one is a character. This also represents the type of the PAN holder

a) First Five Characters

P is an Individual
C is a Company
H is Hindu Undivided Family (HUF)
T is Trust
F is Firm
B is Association of Persons (AOP)
J is Artificial Juridical Person (AJP)
L is Local Authority
E is Elective Body
G is Government
b) Sixth Character

This is derived from the last name of the applicant.
c) Next Four Characters

The next four characters are the digits between 0001 and 9999.
d) Tenth Character

The tenth character represents an alphabetic check digit. It can be any character from A to Z.

Why is a PAN Card Important?

A PAN card is a document that you need for a lot of things, one of its uses being that it is compulsory for filing your income tax returns. However, it is also required as proof of identity and for performing personal transactions and specific business.

You must have a PAN card for all the following transactions.

PAN is required for investing in Mutual Funds or opening demat account
Making insurance payments over a specific amount
Starting a cash deposit or a fixed deposit of a certain amount
Making investments in securities over a specific amount
Registering your business
Getting a new credit/debit card
Selling or buying a vehicle above a certain amount
Applying for a new gas connection
Purchasing property
Applying for a new telephone connection
Purchasing jewellery
Borrowing a loan
Opening a new bank account
Filing your IT returns

Who Should Get a PAN Card?

Following are all the tax-paying entities that need to have permanent account numbers under the IT Act of 1961.

All kinds of charitable organisations, trusts, and associations
Exporters and importers who need to pay any kind of duty charges or tax as prevalent by the law
Any person who is carrying out a professional practice or business which gets them a yearly turnover of over Rs. 5 lakh in any assessment year
Any individual who is liable to pay tax or who has paid tax to the Income Tax Department.

How to Apply for a PAN Card?

You can understand what is PAN card and apply for it either offline or online.

Below is the step-by-step guide on how you can apply for a PAN card online.

Step 1: Visit the official website of the UTIITSL or the Protean e-Gov Technologies Limited and find the appropriate section to click on “Apply Online”.

Step 2: Fill in all your details accurately and submit the form.

Step 3: Get redirected to pay the fee, and once you are done paying, an acknowledgement number will appear.

Step 4: Save that number and send all the supporting documents to the NSDL by post or courier.

Step 5: Your PAN card will be dispatched to you once you have verified all your details.

You can also get a PAN card offline by following the steps below.

Step 1: Visit the official website and print out the application form.

Step 2: Fill in all the sections correctly and submit it with the attested documents at an authorised PAN centre.

Step 3: You will also pay the fee after submitting the form.

Step 4: Your PAN card will be mailed to your residential address once your documents and application are processed and verified.

How to Link My Aadhaar Card and PAN Card?

You can get your Aadhaar card linked after understanding what is PAN card. You can start by registering yourself on the e-filing portal, after which you can follow the process below to complete the linking.

Log in to the official income tax e-filing portal using the PAN number as your user ID.
Select “Link Aadhaar” under the “Profile Settings”.
Fill in all the needed details that are provided on your PAN card, and then click on “Link Now”.
After completing it, you will get a message mentioning that the link has been successful.

Final Thoughts!

The PAN full form tells you that it is a number, but it does not highlight its importance enough. The PAN is allotted by the income tax department so that you can easily apply for anything you want and use it as proof of identity. Every part of the permanent account number is important, and the first three characters are a sequence from the alphabet. The fourth character informs about the type of taxpayer you are, with the fifth character being the first letter of your surname. The rest of the numbers are also equally significant, and they set your PAN apart from the others. Ultimately, this is a vital document that you must keep safely after receiving it since every individual will need it at every turn.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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