The PAN Card stands out as a key identity document for Indian residents. PAN means Permanent Account Number. It is issued by the government of India to track all your tax and money-related matters. You need a PAN Card to open your bank account, apply for a loan, buy or sell property, invest in mutual funds or shares, and even to receive your salary. Without a PAN Card, you may be restricted from doing a lot of activities. In India, a PAN Card can be applied for by a major individual or a business entity such as a company or an LLP.
This blog shall help you understand the meaning of the PAN Card and the steps to apply for it.
What is PAN?
The Income Tax Department of India gives out a Permanent Account Number (PAN). This PAN has an influence on how the Central Board of Direct Taxes (CBDT) oversees things. It’s a code made up of 10 letters and numbers.
Example number of the PAN Card: AAAPA1234A.
Breakdown of PAN Card number:
The fourth character of the PAN Card represents the PAN Holder. In the present case, P stands for the Individual, normally:
- C stands for Company
- H stands for Hindu Undivided Family
- A stands for Association of Persons (AOP)
- B stands for the Body of individuals
- G stands for the Government Agency
- J stands for the Artificial Juridical Person
- L stands for the Local authority
- F stands for the Limited Liability Partnership and Firm
- T stands for the Trust
The fifth character in the PAN Card represents the last name of the PAN Card holder
The following four numbers in the PAN Card
- The following four numbers are the numbers ranging from 0001 to 9999. Every PAN Card holder is assigned a new number.
- The last, i.e., 10th character, is an alphanumeric check digit.
Who Can Apply for a PAN Card?
PAN is not restricted to Indian citizens alone. The following categories can apply for a PAN card:
- Individuals: All resident Indians above 18 years.
- Minors: Parents/guardians can apply on behalf of minors.
- HUF (Hindu Undivided Family): The Karta of the family applies for PAN.
- Companies, LLPs, Firms, Trusts, and Societies.
- Foreign Nationals and NRIs: Anyone earning income in India or engaging in business here can apply.
Why is PAN Important?
PAN was introduced to prevent tax evasion and bring transparency in financial dealings. PAN Card is used in:
1. Anyone whose income is exempted must file an ITR, and a PAN is compulsory for this.
2. Banking Transactions: PAN is needed to open a bank account, apply for loans, or make deposits above ₹50,000.00.
3. Opening a demat account with a depository or custodian of securities.
- Cash payment of more than ₹50,000 in hotels or restaurants against a bill.
- Cash payment of more than ₹50,000 for foreign travel or purchase of foreign currency
- Cash deposits of more than ₹50,000 in one day with a bank or cooperative bank
4. Life insurance premium payments of more than ₹50,000 in a year.
5. Contracts for purchase or sale of securities (other than shares) above ₹1,00,000 per transaction.
6. Sale or purchase of unlisted company shares above ₹1,00,000 per transaction.
7. Sale or purchase of goods or services (not covered above) exceeding ₹2,00,000 per transaction.
Documents Required for PAN Application
You need the following documents for PAN Registration in India:
1. For Individuals (Residents):
- Proof of Identity: Aadhaar card, Voter ID, Passport, Driving License.
- Proof of Date of Birth: Birth certificate, class 10 mark sheet, Passport, Aadhaar Card
- Proof of Address: Utility bills, Passport, Bank statement, Aadhaar Card
- For paper forms, affix two recent coloured photos (3.5 cm × 2.5 cm).
2. For Companies and Firms:
- Certificate of Incorporation (CIN)
- Partnership deed (for firms).
- LLP Agreement for the Limited Liability Partnership
- Address proof of registered office of the company/firm
3. For NRIs/Foreign Nationals:
- Passport copy.
- OCI/PIO card.
- Proof of address outside India.
How to Apply for a PAN Card?
Step 1: Choose first how you will apply
You can apply for a PAN either Online through the PAN application portals (UTIITSL or Protean, formerly NSDL) or offline by visiting a PAN application centre of UTIITSL/Protean.
Step 2: Fill out the correct form
- Form 49A for Resident individuals and resident non-individuals.
- Form 49AA for Non-resident individuals/foreign entities.
- Companies which are incorporated in India may apply for a PAN within the MCA incorporation form (SPICe/SPICe+).
Step 3: Enter Assessing Officer (AO) details
- The portal helps you locate your AO code by city and category. Select carefully.
Step 4: Upload/attach proofs and submit
- Online: Upload scans (as per file size/type rules). Use e-Sign/e-KYC if offered.
- Offline: Attach self-attested copies and submit the physical set at the centre.
Step 5: Pay the fee online or at the centre. Keep the acknowledgement number with you.
Step 6: Track your application through the acknowledgement number to check the status of your application.
Step 9: Receive your PAN
- e-PAN at your registered email.
- Physical PAN card is delivered by post, if opted.
Special Cases
- Minors: PAN card must be applied for by the parent or guardian on their behalf
- HUF: Apply in the name of the HUF with Karta’s documents and proof of HUF existence (e.g., deed/affidavit).
- NRIs: Use Form 49AA. Keep a valid passport and proof of overseas address.
- Companies/LLPs: For new companies, PAN can be allotted through the MCA incorporation form (SPICe/SPICe+) itself. For existing entities, use Form 49A via UTIITSL/Protean, with incorporation/registration proof and authorised signatory documents
Conclusion
The Permanent Account Number (PAN) does more than identify you for taxes. It is necessary for everyday paperwork, including banking, investing, and buying property, to be easier. You can apply for a PAN card online or get an e-PAN right away by visiting the Income Tax Portal online. If you understand the process, have the right documents, and know what mistakes to avoid, you can apply without any mistakes.
