Historical Background of Permanent Account Number (PAN)?
Know about your PAN card:
PAN stands for Permanent Account Number. It is an alphanumeric 10-digit character number allocated to the PAN Cardholder in the form of government-issued identification.
Permanent Account Number helps to identify the taxpayer’s income or the PAN cardholder. PAN card required in the case of your salary is subject to taxable slabs, taxable professional fees, for opening a bank account, or for selling or purchasing assets.
A taxpayer had to be classified using the General Index Registration No. (GIR No) prior to the launch of the PAN in 1972.
It was a manual operating system, specific to the person assessing officer group, which eventually led to errors/miscalculations.
It was unique only to the non-national circle level.
the concept of PAN (based on old series i.e. GIR No. series) came up in 1972 with the government of India. This, too, lacked individuality nationally.
Initially, PAN Card allotment was rendered manually, and each ward/circle was supplied with a certain collection of numbers to prevent duplication.
There were a number of reasons why GIR No. & PAN (olds) were not successful.
No database to verify PAN Allotment Multiplicity.
Neither centralized authority
NON -Permanent Taxpayer number
Non-structured database, with few parameters restricted.
Permanent Account Number (PAN) “is a 10 digit alphanumeric number provided under section 139A of the Income Tax Act, 1961 by the Income Tax Department (ITD).
It is a unique Id number that includes a track record of all an individual’s income-related aspects.
Now we will discuss in detail the character of 10 Digit of PAN card;
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PAN CHARACTERS
1st-5th characters
First 3 characters: Alphabetic series from AAA to ZZZ
4th character: Represents Status of PAN card holder
“A”-stands for Association of Persons (AOP)
“B”-stands for Body of Individuals (BOI)
“C”-stands for Company
“F”-stands for Firm/ Limited Liability Partnership
G”-stands for Government Agency
“H”-stands for Hindu Undivided Family (HUF)
“J”-stands for Artificial Juridical Person
“L”-stands for Local Authority
“P”-Individual
“T”-stands for Trust
5th character: Represents first letter of PAN holder’s last name i.e. surname
other than the Individual representing the 1st letter of the name of Permanent Account Number Card Holder.
6th– 9th Characters
Representing the Number series of sequence from 0001 to 9999
10th Character
Representing Alphabetic Check digit
The reason behind having a PAN card?
India is nationally recognized as both a populated and highly diversified country around the world. India has various castes, ideologies, religions and cultures, and other dimensions of society.
To run an effective government in such a diversified country, every citizen of India needs to contribute a certain amount of money in the form of tax from his or her source of income.
It will help the government-run the country smoothly and pledge the country’s proper law and order. Taking all these considerations in mind, the Government of India implemented the PAN idea in 1972.
Under section 139 A of the Indian Tax Act 1961, the PAN is made a compulsory document and It is necessary for filing income tax returns.
There is no need to face any more complicated problems surrounding the preservation of records as in the past. Earlier, losing every document placed a huge burden on individuals.
But due to the digitalization, the Department of Income Tax can easily provide all important details related to the PAN card to a person and can also provide you with a duplicate copy of the PAN card if you have lost your PAN card.
The PAN Card is the same as the Social Security member or SSN used in US. The aim of SSN is to monitor citizens for purposes of social security. For taxation procedures, it becomes a primary identification number.
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Need of PAN Card and its benefits:
You would need a PAN card to file IT returns. This is the primary reason why everyone is applying for a PAN card.
When you plan to apply for a loan, a PAN card is necessary. To get a loan application accepted, every bank and other institution that lends loans require PAN card information. Not only these but also educational and personal loans also require PAN cards for verification.
By use PAN we can easily open a current bank account or savings account if you have a PAN card. Whether it’s a cooperative bank, a public sector bank, or a private sector bank, it doesn’t matter.
If you deposit cash in excess of 50k at a time, it is mandatory to provide PAN card information in accordance with RBI regulations.
We can plan to invest over than 50k in a bank in the form of fixed deposits (FD), you also need to provide PAN Card details.
It is quite important as TDS is deducted by the bank on interest earned by Fixed Deposits (FD).
The situation, when you’d like to buy mutual funds, debentures or bonds for transactions in excess of Rs 50,000, then a PAN card, is also an important document.
Bank institutions, money exchange offices, and PAN card details are also required for currency conversion.
At the time of applying for a credit card or debit card, a PAN card must be issued with information.
PAN Card details are required for the valuation of all vehicles over 500000 at the time of purchase or sale.
The PAN card has also acted as proof of identification so that it can be used when applying for other proof of government identity.
If you have purchased more than 5,00,000 worth of jewelry, then you must also provide the PAN details.
In order to make an insurance payment that exceeds Rs 50,000 a year, there is also a need to provide PAN card details for that.
WHO CAN OBTAIN THE PERMANENT ACCOUNT NUMBER?
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A person whose total income exceeds the chargeable limit in the assessment year.
Trust / charitable institution that is required to file income from property held under its name. (Section 139-4A of IT Act 1961).
Business/profession the total sales/income / gross receipts of which exceed the limit.
The financial transaction with the obligatory mention of the PAN card.
Different Types Of PAN Card
For Individuals:
Permanent Account Number (PAN) card for individuals is the most common type and can be applied via Form 49A that is accessible online on the websites of the Income Tax Department, NSDL and UTIITSL. Resident Indians are included in this category.
All Indian minors and students can also eligible to apply for a PAN card.
For NRIs or others Person of Indian origin
A Permanent Account Number (PAN) card can be used for tax purposes in India by NRIs and PIOs. By applying for a PAN card via Form 49A.
For foreign entities paying tax in India
PAN cards may also be used by firms or large corporations who are registered outside India and pay taxes in India by filling out the Form 49AA,
For NRE and OCI
A Permanent Account Number (PAN) Card in India can also be apply by Overseas Citizens of India (OCI) and Non-Resident Entities (NRE) by filling out through Form 49AA.
For Indian Companies
We may also be obtained PAN cards by companies and corporate entities that are registered and operating in India. For financial and tax-related transactions, they need to have a PAN card.
VARIOUS TYPES OF FORMS :
Form 49A: Indian nationals/entities formed into India
According to section 139A of the Income Tax Act, 1961; application form 49A is for the issuance of PAN Card to Indian citizens, an entity formed in India. It is used to add a new PAN or other previously requested changes.
Form 49AA: Foreign citizens
Rule 114 of the Income Tax Act, 1962, allows foreign citizens to apply for a PAN Card in India by submitting a form 49AA.
It is filled by foreign nationals/entities formed outside India but has considerable responsibility for taxation of their operation in India.
Form 60: Individual/person does not have a PAN Card but does join a transaction referenced to Rule 114B.
Some papers are also required to be attached to Form 49A or Form 49AA for the PAN card or the acknowledgment form (if you apply online) authentication process when applying for a PAN Card.
When individuals or other organizations apply for a PAN card, the main documentation needed for the PAN application form.
-For Individual
Proof of Identity(POI)
Arms License
Pension Card containing applicant photograph
Central Government’s Health Scheme Card or Ex-Servicemen’s Contributory Health Scheme Photo Card
Bank certificate which is issued on the bank’s letterhead from the branch of the bank containing an attested photograph of the applicant along with the bank account number.
Government ID – Aadhar, Driving License, Voter ID, etc.
Photo ID card issued by Central Government, State Government, or a Public Sector Undertaking (PSU)
Proof of Address(POA)
Domicile certificate
Aadhar Card
Date of birth (DOB) proof
Birth certificate by the Municipal Authority/authorized authority
Matriculation certificate
Pension order
Passport
Marriage certificate
Electricity/Landline Bill
Post-paid mobile phone bill
Water bill
LPG or piped gas connection bill or Gas Connection book
Bank account statement
Credit card statement
Post Office account Passbook
Passport
Domicile certificate (DC)
An affidavit is sworn before a magistrate stating the applicant’s date of birth
Registration certificate issued to the Limited Liability Partnership (LLP) or Firms by the Registrar of Companies
Individual who is not a citizen of India
Proof of Identity(POI)
Passport copy
PIO card photocopy
OCI Card photocopy
Copy of other national or citizenship Identification Number or TIN attested by applicable ‘Apostille’, Indian Embassy, High Commission, or Consulate where the applicant is based.
Proof of Address(POA)
bank statement of the residential country
Copy of NRE bank statement in India
Scan-Copy of resident certificate or Residential permit
Passport copy
PIO card photocopy
OCI Card photocopy
Scan of other national or citizenship Identification Number or TIN attested by relevant ‘Apostille’, Indian Embassy, High Commission or Consulate
Processing fees to be paid by using Net Banking/Debit credit card/Demand draft.
After processing fees are paid then the final page contains a 15 digit Acknowledgment number.
After receiving the acknowledgment number, one should send them to NSDL along with form 49A within 15 working days.
When verification is done PAN Card number is generated by NSDL.
Import Things to considered
When a person who is engaged in any of the above transactions is a MINOR & has no taxable income, he/she should state the father/mother/guardian PAN Card information.
Anyone not holding a PAN Card and entering into transactions in which PAN is mandatory shall fill out Form No. 60 according to Rule 114B of Income Tax Act, 1962.
Note: PAN Card details are required for source tax deduction i.e. The aggregation of TDS or Tax at source i.e. TCS, as described in section 139 [5b & 5c].
The penalty of Rs. 10K for not linking Pan with Aadhar
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If you do not link your Permanent Account Number to your Aadhaar card within the March 31 deadline, the income tax department may impose a penalty of as much as Rs. 10K for using an inoperative Permanent Account Number.
The income tax department had previously stated that all unlinked PAN cards would be considered “inoperative” and now a new notice has been released stating that certain Permanent Account Number cardholders would face consequences for failure to supply PAN under the Income Tax Act.
As per Section 272B of the Income Tax Act, when a Permanent Account Number becomes inoperative, it would be presumed that PAN has not been furnished/quoted as prescribed by law and that a penalty of Rs. 10K will apply.
Using the PAN card as ID proof for non-tax-related reasons such as opening a bank account or applying for a driving license does not incur a penalty,
In the case of individual transactions, the liability would be imposed on all other instances, i.e. the assessee will have to pay the penalty on any possible non-compliance with the actual transaction.
An Issue may emerge if the bank account opened with an inoperative PAN has activities that put it under income tax jurisdiction. For eg, whether you need to deposit or withdraw cash over Rs.50K Pan is necessary.
Rajput Jain & Associates, Chartered Accountant, said that in view of the penalty provisions laid down in Section 272B.
Inoperative Permanent Account Number would relate to the non-furnishing and non-quotation of PAN, which is mandatory pursuant to section 139A of the Act. Section 272B(1), for non-compliance, carries a penalty of Rs. 10K.
if you link your Permanent Account Number and Aadhaar, the PAN will become active and there will be no fines applied after the linking date.
Many with inoperative PAN cards must bear in mind that they do not need to reapply for a new PAN card as once the transfer is completed the Permanent Account Number card becomes usable again.
Central Board of Direct Taxes has made Instant PAN allotment in near to real-time available at free of cost. Individuals (other than minors) with a valid Aadhaar number (with an updated Mobile No) can avail of the PAN allotment facility.
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Get in touch with us today to find out more about the services we offer! Call us at +91-9555 555 480. We also offer PAN Registration services!
Rajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders.
Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields.
We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.
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