Permanent Account Number (PAN) is a code that acts as an identification for Indian nationals, especially those who pay Income Tax. It is a unique, 10-character alpha-numeric identifier, issued to all judicial entities identifiable under the Indian Income Tax Act, 1961. It is issued by the Indian Income Tax Department under the supervision of the Central Board for Direct Taxes (CBDT) and it also serves as an important proof of identification.
The PAN is mandatory for a majority of financial transactions such as opening a bank account, receiving taxable salary or professional fees, sale or purchase of assets above specified limits etc.; especially high-value transactions. The primary purpose of the PAN is to bring a universal identification to all financial transactions and to prevent tax evasion by keeping track of monetary transactions, especially those of high-net-worth individuals who can impact the economy.
The PAN is unique to each individual and is valid for the life time of the holder, throughout India. An important point to note would be that once issued, the PAN is not affected by a change of address.
Quoting the PAN is mandatory when filing Income Tax returns, tax deduction at source, or any other communication with Income Tax Department. PAN is also steadily becoming a mandatory document for opening a new bank account, a new landline telephone connection / a mobile phone connection, purchase of foreign currency, bank deposits above Rs. 50,000/=, purchase and sale of immovable properties, vehicles etc.
Obtaining PAN is optional and voluntary like passport, driving license, Aadhaar etc. However, its use is mandatory at required places, like PAN for high-value financial transactions, Driving License for motor driving, passport for foreign travel etc..
One can apply for PAN by submitting the prescribed PAN application to the authorized PAN agency of the district or through online submission to NSDL along with 2 recent passport size color photographs, proof of ID, Address and Date of Birth and fee. In case of Re-print (re-issue), a photocopy of the old PAN is also required. It takes about 10–15 days to receive the card.
There are two types of PAN applications:
Application for allotment of PAN :
This application form should be used when the applicant has never applied for a PAN or does not have PAN allotted to him. Applicant may visit ITD’s website www.incometaxindia.gov.in to find whether a PAN has been allotted to him or not.
Following forms have been notified by ITD for submitting applications for allotment of new PAN :
FORM 49A : - To be filled by Indian citizens including those who are located outside India.
FORM 49AA : - To be filled by foreign citizens.
Application for new PAN Card or/and Changes or Corrections in PAN Data :
Those who have already obtained the PAN and wish to obtain the new PAN card or want to make some changes / corrections in their PAN data, are required to submit their applications in the following form prescribed by ITD:
'REQUEST FOR NEW PAN CARD OR/AND CHANGES OR CORRECTION IN PAN DATA’: - The same form can be used by Indian as well as foreign citizens. A new PAN card bearing the same PAN but updated information is issued to applicant in such case.
PAN is an important document for foreign citizens also, who wish to undertake business in India or wish to invest in India. Procedure to obtain PAN is same as applicable for Indian citizens. However, the application is required to be filled using Form 49AA meant for foreign citizens and submitted at any of the authorized PAN Service Centre through the authorized representative in India. List of documents applicable for foreign citizens are given below:
Documents accepted as Proof of Identity
Copy of passport, or Copy of Person of Indian Origin (PIO) card issued by Government of India, or Copy of Overseas Citizen of India (OCI) card issued by Government of India, Or Copy of other national or citizenship Identification Number or Taxpayer Identification Number duly attested by “Apostille” (in respect of countries which are signatories to the Hague Convention of 1961) or by the Indian Embassy or High Commission or Consulate in the country where the applicant is located or authorised officials of overseas branches of Scheduled Banks registered in India (in prescribed format) .
Documents accepted as Proof of Address
Proof of Identity documents mentioned above bearing address of the applicant or Copy of Bank account statement in the country of residence, or Copy of Non-resident External (NRE) bank account statement in India, or Copy of Certificate of Residence in India or Residential permit issued by the State Police Authorities, or Copy of Registration certificate issued by the Foreigner's Registration Office showing Indian address, or Copy of Visa granted & Copy of appointment letter or contract from Indian Company & Certificate (in original) of Indian address issued by the employer.
Documents accepted as Proof of Identity & Proof of Address
Copy of Certificate of Registration issued in the country where the applicant is located, duly attested by “Apostille” (in respect of the countries which are signatories to the Hague Convention of 1961) or by the Indian Embassy or High Commission or Consulate in the country where the applicant is located or authorised officials of overseas branches of Scheduled Banks registered in India (in prescribed format) ; or Copy of registration certificate issued in India or of approval granted to set up office in India by Indian Authorities.
Though PAN card serves as an identity proof for opening new bank accounts, credit cards, phone connections etc., PAN Card is mandatory for following purposes:
To pay direct taxes and to file income tax returns
To avoid deduction of tax at higher rate
To carry out specific type of and amount of transactions like sale and purchase of fixed assets of or above 5 Lakhs
Sale and purchase of vehicles except two-wheelers.
Bank deposits exceeding Rs. 50,000 in single bank in 24 hours.
Investment in securities exceeding Rs. 50,000/-
Once you have applied for the card, you can track pan card status from the government portal.