Life Insurance in India
January 8, 2019

PAN card acts as a photo identity proof and is mandatory for taxpayers in India to have one. In this guide by H&R Block PAN card's benefits are discussed.

What is PAN Card?

Last Update Date : January 16, 2019

Permanent Account Number often referred to as PAN is a 10-digit alphanumeric identification number issued to all individuals, companies, non-resident Indians or anyone who pays taxes in India.

Other important facts about PAN Number are listed below:

  • All the tax-related information of a person/company is stored against a single PAN across India.
  • No two persons can have the same PAN number.
  • PAN card acts as a unique identity proof along with driving licence, aadhaar card, voter ID, etc.
  • It is valid for a lifetime irrespective of any change in address of the cardholder.
  • PAN is mandatory for all big financial transactions, to receive a taxable salary, to open bank assets, to make sale and purchase of assets, etc.

[ Read: What is e-PAN card? ]

What is the purpose of PAN card?

  • Acts as a unique identification number for PAN holders
  • Helps the government to track all the financial transactions by individuals/ entities
  • Tracks tax evasion by anyone who is liable to pay tax

[ Read: How to apply PAN card online? ]

Brief history of PAN

Before the introduction of PAN, there was a General Index Register (GIR) number which was allotted to a certain category of individual taxpayers. The number was unique only for the taxpayers falling under a particular Assessing Officer’s (AO) ward and not throughout India. This led to errors or incorrect tax calculations at the time of tax assessment.

To deal with these errors and to adopt more effective methods of tax calculation the concept of PAN was introduced by the Indian government in 1972 as per section 139A of the Income Tax Act, 1961. PAN card was made mandatory for the taxpayers in 1976.

PAN Card Details

What is PAN card and it's details

Sample PAN Card

Here are the details that are available on PAN card of the cardholder:

  • Logo of Government of India
  • Quick Response or QR Code
  • PAN Number
  • Full Name of PAN card holder
  • PAN card holder’s date of birth
  • PAN card holder’s father’s name
  • Photograph of the card holder
  • Signature of the card holder

Structure of PAN Number

  • Out of the 10 digits that it has, the first 3 characters consist of alphabets sequenced from AAA to ZZZ.
  • The 4th character gives information about the cardholder. Here is the list on the type of taxpayer/card-holder who is defined by a letter.
    1. A stands for Association of Persons (AOP)
    2. B stands for Body of Individuals (BOI)
    3. C stands for Company
    4. F stands for Firm
    5. G stands for Government
    6. H stands for Hindu Undivided Family (HUF)
    7. L stands for Local Authority
    8. J stands for Artificial Judicial Person
    9. P stands for Individual
    10. T stands for Trust (Association of Persons)
    11. E stands for LLP (Limited Liability Partnership)
  • The 5th character is a letter picked from the ‘Surname’ of the individual
  • Characters from 6-9 are random numbers
  • 10th character is again an alphabet meant to verify the validity of the code

SIDENOTE:

  • The Income Tax Department has introduced a new design and format of PAN card after January 2017.
  • Quick Response (QR) code is printed on the card that represents the cardholder details used for data verification
  • The location of the PAN number and signature of the PAN holder have been changed on the card.
Latest PAN card design

Old & New PAN Card

Use of PAN Card

  • PAN card number is required while filing the income tax return.
  • Permanent Account Number is mandatory for opening a new bank account, demat account, foreign currency purchases etc.
  • PAN card is required to register a new business.
  • Its required to carry out transactions like sale and purchase of house property, etc.
  • PAN number is required to transfer money from NRE to NRO account.
  • There are various financial transactions which require PAN details like making payments of more than Rs 50,000 towards bank deposits.
  • Purchase of shares exceeding Rs 50,000 in value.
  • Any payment for insurance policy above Rs 50,000 requires quoting of PAN number
  • Any purchase of bonds above Rs 50,000, etc.
  • PAN number is mandatory to apply for Visa, Credit Card, Bank loan, etc.

SIDENOTE: An individual is expected to make a declaration through Form No. 60 in case he carries out any financial transaction requiring PAN but doesn’t own one.

[ Read: How to Link Aadhaar to PAN Card? ]

Different Types of PAN Card Application Forms

Two types of PAN card application forms are available to all the taxpayers in India depending on the category they fall in as explained below:

Form No Description Form Download
49A All applicants who are either Individuals/ HUFs/ Companies/ Firms can use this form. It’s applicable when they don’t have a PAN card and have never applied for one in the past. Download Form 49A
49AA This form is used by those foreign individuals and companies which are not incorporated in India and wish to invest and do business in India. Download Form 49AA

Benefits of PAN Card

  • PAN card acts a proof of ‘date of birth’ while applying for Visa, bank loans, etc.
  • It also acts as a photo identity proof for the cardholder.
  • It helps the government in tracking various financial transactions.

How can H&R Block help you?

Saving taxes and filing income tax return accurately becomes very easy when you have professional help. This is where we come into the picture. You can either use our intuitive income tax e-filing platform to easily e-file your tax return or let our tax experts file it for you. We have a team of in-house tax experts who can accurately file your tax returns online while giving you maximum tax benefits.

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Still Have Questions?