Permanent Account Number (PAN) is a ten-digit alphanumeric 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 PAN 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 assessee, 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.
It is mandatory to quote PAN Number in all documents pertaining to the following financial transactions:-
- sale or purchase of any immovable property valued at five lakh rupees or more
- sale or purchase of a motor vehicle or vehicle, [the sale or purchase of a motor vehicle or vehicle does not include two-wheeled vehicles, inclusive of any detachable sidecar having an extra wheel, attached to the motor vehicle
- a time deposit, exceeding fifty thousand rupees, with a banking company
- a deposit, exceeding fifty thousand rupees, in any account with Post Office Savings Bank
- a contract of a value exceeding one lakh rupees for sale or purchase of securities
- opening a bank account
- making an application for installation of a telephone connection (including a cellular telephone connection)
- payment to hotels and restaurants against their bills for an amount exceeding twenty-five thousand rupees at any one time
- payment in cash for the purchase of bank drafts or pay orders or banker’s cheques for an amount aggregating fifty thousand rupees or more during any one day
- deposit in cash aggregating fifty thousand rupees or more with a bank during any one day
- payment in cash in connection with travel to any foreign country of an amount exceeding twenty-five thousand rupees at any one time.
Who must have a PAN Number?
- All existing assesses or taxpayers or persons who are required to furnish a return of income, even on behalf of others, must obtain PAN.
- Any person carrying on any business or profession whose total sales, turnover or gross receipts are or is likely to exceed five lakh rupees in any previous year;
- Any person, who intends to enter into financial transaction where quoting PAN is mandatory, must also obtain PAN.
- The Assessing Officer may allot PAN to any person either on his own or on a specific request from such person.