PAN (Permanent Account Number)
PAN is the unique 10-character alphanumeric identifier issued by India’s Income Tax Department, needed for tax filings, transactions and registrations.
PAN stands for Permanent Account Number. It is a 10-character alphanumeric identifier issued by the Income Tax Department of India to every taxpayer — individuals, companies, partnerships, trusts, foreigners with income in India and non-resident Indians. PAN is the primary reference number used across all tax-related and many financial transactions in India.
Structure of a PAN
A PAN is always 10 characters long and follows a fixed pattern:
Example: AAACT2727Q
| Position | Format | Meaning |
|---|---|---|
| 1–3 | Three alphabets | Series code (any combination: AAA–ZZZ) |
| 4 | One alphabet | Type of taxpayer: P = individual, C = company, H = HUF, F = firm, A = AOP, B = BOI, G = government, J = artificial juridical person, L = local authority, T = trust |
| 5 | One alphabet | First letter of the taxpayer's surname (for individuals) or entity name (for others) |
| 6–9 | Four digits | Sequential number from 0001 to 9999 |
| 10 | One alphabet | Check character |
The fourth character tells you the type of entity. AAACT = a trust (T at position 4 = Trust). AABCP = company (C at position 4 = Company). For an individual named Priya Sharma, the fifth character would be S (first letter of surname Sharma).
Who Must Have a PAN?
Individuals
Any person liable to pay income tax in India must have a PAN. Beyond tax liability, PAN is mandatory for a growing number of financial transactions under Rule 114B of the Income Tax Rules:
- Opening a bank account (current or savings) — except Basic Savings Bank Deposit Accounts under certain limits
- Cash deposits of ₹50,000 or more in a bank in a single day
- Investing ₹50,000 or more in mutual funds, bonds, debentures
- Purchase of property exceeding ₹30 lakh (both buyer and seller must quote PAN)
- Sale of a vehicle other than two-wheelers (amount exceeding ₹5 lakh in some transactions)
- Payment of ₹50,000 or more in cash to hotels or restaurants in a single transaction
- Foreign travel expenses above ₹50,000 per person
- Tax deduction at source (TDS) — any person who receives income subject to TDS must quote PAN to the deductor
Businesses and Entities
All companies, firms, LLPs, trusts and other registered entities must have a PAN. PAN of the entity is required for:
- Filing income tax returns
- GST registration (GSTIN is built around PAN)
- Opening a current account
- Any banking or financial transaction above thresholds
- Receiving payments subject to TDS
NRIs and Foreigners
NRIs who have taxable income in India (rental income, capital gains, interest) must have a PAN to file their ITR and to prevent excess TDS deduction. Foreigners employed in India or earning income from India also require a PAN.
How to Apply for a PAN
PAN applications are filed through two authorised portals:
NSDL (Protean eGov Technologies): https://www.onlineservices.nsdl.com — Form 49A for Indian citizens, Form 49AA for foreign nationals
UTIITSL: https://www.utiitsl.com — Same forms, alternative portal
Documents required (for individuals):
- Identity proof (Aadhaar, passport, voter ID, driving licence)
- Address proof (same documents, or utility bill, bank statement)
- Date of birth proof
- Photograph
Processing: Online applications with Aadhaar-based OTP can result in an e-PAN within minutes (the physical card takes 2–3 weeks by post). The e-PAN is legally valid.
Fee: ₹91 for an Indian address delivery; ₹864 for foreign address delivery (as of the time of writing).
PAN-Aadhaar Linking
The government mandated linking of PAN with Aadhaar. Unlinked PANs became inoperative after the deadline (30 June 2023, later extended). An inoperative PAN:
- Cannot be used for TDS/TCS — deduction is made at a higher rate (double the specified rate or 20%, whichever is higher) under Section 206AA
- Cannot be used for financial transactions that require PAN quoting
- ITR filed with an inoperative PAN will not be processed
PAN-Aadhaar linking can still be done on the e-filing portal with a fee of ₹1,000 as late-linking penalty. Once linked, the PAN is reactivated within 30 days.
One PAN Per Person
Each individual and entity can hold only one PAN. Having more than one PAN is illegal and can attract a penalty of ₹10,000 under Section 272B. If you accidentally have two PANs (e.g., two applications submitted separately), the duplicate must be surrendered to the jurisdictional Assessing Officer.
PAN and TDS
When TDS is deducted on your income, the deductor deposits it against your PAN. The credit appears in Form 26AS (your consolidated tax statement) and in the Annual Information Statement (AIS) on the Income Tax portal. These credits are claimed when you file your ITR. If you do not quote your PAN to a deductor, TDS is deducted at the higher rate (20% or double the applicable rate).