Permanent Account Number (PAN)
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* Excluding Govt. Fees
Overview
- Objective: The Permanent Account Number (PAN) is a worldwide identifying number that enables people and entities to have their financial activities and tax obligations more easily tracked. It serves many functions, such as filling out tax returns, opening bank accounts, making investments in financial instruments, and carrying out high-value transactions, among others.
- Presentation: A PAN is a ten-character alphanumeric code that is commonly written in the style of five letters followed by four numbers and ending with a single letter (for example, ABCDE1234F). The first three letters represent a sequence of alphabetic series from AAA to ZZZ, and the fourth letter signifies the type of the PAN holder (for example, P for individuals, C for companies, F for firms, etc.). The PAN is a nine-digit number that is used in India.
- Distribution: The Permanent Account Number (PAN) is distributed by the Income Tax Department via its authorised agents, such as the National Securities Depository Limited (NSDL) and the UTI Infrastructure Technology and Services Limited (UTITSL). You can apply for a PAN card as an individual or an entity by filling out a PAN application form, providing the required documents, and paying the associated fees.
- Importance: Individuals need a Permanent Account Number (PAN) to claim tax deductions, submit personal income tax returns, receive salaries, open bank accounts, and engage in significant financial transactions. Beyond these tax-related uses, a PAN is also necessary for several other purposes, such as applying for a passport, buying or selling real estate, and accessing government subsidies or programs.
- PAN Importance for Entities: The PAN is of equal significance for enterprises and other entities. It is necessary for acquiring a business registration or incorporation, creating a bank account for a business, filing tax reports, conducting financial transactions, and meeting the requirements of numerous regulatory agencies.
- Universal PAN Requirement: A Permanent Account Number (PAN) is necessary not only for Indian citizens but also for certain non-residents involved in financial activities in India. Regardless of any changes to the name, address, or other personal details of the individual or entity, the PAN remains constant throughout their lifetime .
Benefits
Individuals can benefit from PAN in the following ways:
- Filing of Income Tax Returns: Individuals are required to provide their PAN when filing their income tax returns. It is helpful in accurately documenting and reporting financial activities, income, and tax obligations.
- Tax Deductions and Exemptions: The PAN enables individuals to make claims to the Income Tax Department for tax deductions, exemptions, and other advantages. It is necessary in order to take advantage of perks such as the House Rent Allowance (HRA), the Leave Travel Allowance (LTA), and other investments that reduce taxes.
- High-Value Transactions: In order to engage in high-value financial transactions, such as the purchase or sale of immovable property, automobiles, or assets valued at more than a certain threshold that is determined by the Income Tax Department, a Permanent Account Number (PAN) is required.
- Opening Bank Accounts: The PAN is required in order to open any type of bank account, including savings and checking accounts. It serves as proof of identity and facilitates seamless banking transactions.
- Formal Identification Credential: The Permanent Account Number (PAN) card is widely recognised as an acceptable form of official identification in a variety of contexts, including the process of applying for a passport, establishing a new phone connection, and engaging in financial transactions.
Advantages
The following are some of the advantages of having a PAN for businesses and other entities:
- Activities Relating to Businesses: In order for businesses to be able to engage in a variety of financial activities, such as issuing invoices, receiving payments, and making payments, they need to have a PAN. It is helpful in keeping track of a company’s profits as well as its expenses and tax obligations.
- Bank Account: A PAN is needed in order to create a business bank account. It makes banking processes run more smoothly and contributes to the maintenance of financial records.
- Registration and Compliance: A PAN is required in order to register a business, receive a variety of business licences, and comply with the many regulatory requirements imposed by the government or other agencies.
- Tax Filings and Assessments: PAN makes it possible for companies to file their income tax returns and comply with other duties relating to taxes. It is helpful in accurately documenting and reporting financial activities, income, and tax obligations.
- Claiming Input Tax Credit (GST): In order to comply with GST-related requirements and claim input tax credit, firms that are registered under the Goods and Services Tax (GST) regime are required to have a PAN.
- Obtaining Loans and Credit Facilities: The PAN is typically required by financial institutions whenever a firm applies for a loan, credit facility, or other financial service. This helps validate the identification of the firm as well as the financial facts of the company.
What is included in this
FAQs
A PAN card is essential for all individuals or entities, including foreign nationals or organizations, receiving taxable income in India. It is also vital for conducting a wide range of financial transactions
Individuals can submit an application for a PAN either by filling out Form 49A, which can be found on the official website of the Income Tax Department, or by working with authorised PAN Service providers. The form, along with the required documentation and payment, needs to be turned in as soon as possible.
In order to apply for a PAN, you will need to provide documentation proving your identity (such as an Aadhaar card, a passport, or a driver’s licence), your address (such as an Aadhaar card, a passport, or a utility bill), and your date of birth (such as a birth certificate or a certificate of graduation from school).
Yes, mentioning the Permanent Account Number (PAN) is required in order to comply with the requirements of filing income tax returns. The PAN enables easier and more accurate reporting of income and deductions, as well as the tracking of financial activities.
PANs are required to be held by all non-individual entities, including corporations, partnerships, trusts, LLPs (Limited Liability Partnerships), and other types of business entities.
Fill out Form 49A or Form 49AA, which may be found on the official website of the Income Tax Department or through authorised PAN service providers, in order to apply for a PAN on behalf of a non-individual entity. The form to use is dependent on the type of entity being applied for. The form, along with the required documentation and payment, needs to be turned in as soon as possible.
Proof of the existence of the non-individual entity (such as a registration certificate, partnership deed, or trust deed), proof of the entity’s address, and proof of the identification of authorised signatories are the documents that are necessary for the PAN application for non-individual entities.
When conducting financial activities, such as opening bank accounts, making payments, issuing invoices, and other types of business transactions, non-individual entities are required to provide their PAN number. This is a mandatory requirement.
No, it is not possible for a non-individual entity to hold more than one PAN at a time. There should only be one PAN assigned to each entity, and this number should be used for all of the entity’s financial and tax-related dealings.
In such a case, one can know his PAN by using the facility of “Know Your PAN” provided by the Income Tax Department. This facility can be availed of from the website of Income Tax Department -www.incometaxindia.gov.in A person can know his PAN online by providing his core details like Name, Father’s Name and Date of Birth. After knowing the PAN you can apply for duplicate PAN card by submitting the “Request for New PAN Card Or/ And Changes Or Correction in PAN Data”
