Permanent Account Number (PAN) is a ten-digit alpha numeric number, issued in the form of a laminated card, by the Income Tax Department, to any "person" who Applies for it or to whom the department allots the number without an application. PAN enables the department to link all transactions of the "person" with the Department. These transactions include tax payments, TDS/TCS credits, returns of Income/wealth/gift/FBT, specified transactions, correspondence, and so on.
PAN, thus, acts as an identifier for the "person" with the tax department. PAN was introduced to facilitates linking of various documents, including payment of taxes, assessment, tax demand, tax arrears etc. relating to an assesses, to facilitate easy retrieval of information and to facilitate matching of information relating to investment, raising of loans and other business activities of taxpayers collected through various sources, both internal as well as external, for detecting and combating tax evasion and widening of tax base.
A Permanent Account Number (PAN) is a unique identification number assigned to individuals, families, and businesses in India. It serves as a vital proof of identity for various financial and non-financial transactions.
- Purpose:
- Financial Transactions: PAN is primarily used for financial transactions such as opening a bank account, receiving taxable salary, sale or purchase of assets, and more.
- Taxation: It is mandatory for filing income tax returns in India.
- Investments: PAN is required for investing in securities, mutual funds, and other financial instruments.
- Structure:
- A PAN is a 10-character alphanumeric code, with a combination of letters and numbers.
- The first five characters are letters, followed by four numerals, and the last character is a letter (e.g., ABZPK1234C).
- Issuing Authority:
- PAN cards are issued by the Income Tax Department of India.
- Application Process:
- Individuals can apply for a PAN through the NSDL (National Securities Depository Limited) or UTIITSL (UTI Infrastructure Technology and Services Limited).
- Form 49A is used for Indian citizens, while Form 49AA is for foreign nationals.
- Importance:
- PAN is crucial for various financial transactions and is often required for KYC (Know Your Customer) purposes.
- It helps in curbing tax evasion by providing a unique identifier for each taxpayer.
- Linkage with Aadhaar:
- The Indian government has made it mandatory to link PAN with Aadhaar (a biometric-based identification system) to curb tax evasion and ensure a unique identity for each individual.
- PAN Card:
- Once the PAN application is processed and approved, a PAN card is issued. The card includes the individual's name, photograph, PAN, and other details.
- Verification:
- PAN details can be verified online through the Income Tax Department's official website.
- Lost or Damaged PAN Card:
- In case of loss or damage to the PAN card, individuals can apply for a duplicate card through the appropriate channels.
- International Applicability:
- While PAN is primarily used in India, it can also be used as an identity proof for international transactions.
It's essential for individuals and entities to comply with the PAN requirements, as it plays a significant role in the financial and taxation systems in India.
Paperless PAN Application:
To make the PAN application process paperless, NSDL has implemented e-KYC (Electronic Know Your Customer) facilities. Here's how it typically works:
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**e-KYC Option:**
- While filling the PAN application form online, choose the e-KYC option if available.
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**Aadhaar Integration:**
- Link your Aadhaar number to the PAN application for electronic verification.
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**Biometric Authentication:**
- Complete the biometric authentication process if required. This may involve fingerprint or iris scans.
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**No Physical Documents:**
- In some cases, e-KYC allows you to skip sending physical documents, making the process paperless.
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**Confirmation:**
- Once the e-KYC process is successful, you should receive a confirmation of your PAN application status.
