Historical Background of Permanent Account Number (PAN)?

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 the 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
• No permanent Taxpayer number
• Non-structured database, with few parameters restricted.

INTRODUCTION OF PERMANENT ACCOUNT NUMBER(PAN)

Permanent Account Number (PAN) “is a ten-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 10Digit of PAN card;

1^st-5^th 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 Individual representing the 1^st letter of the name of Permanent Account Number Card Holder.

6^th– 9^th  Characters

Representing the Number series of sequence from 0001 to 9999

10^th Character

Representing Alphabetic Check digit

WHO CAN OBTAIN THE PERMANENT ACCOUNT NUMBER?

• 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.

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.

ESSENTIAL DOCUMENT NEEDED WHILE APPLY FOR PERMANENT ACCOUNT NUMBER (PAN)

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

• Voter’s ID Card
• Driving License
• Property registration document

-For HUF (Hindu Undivided Family)

• An affidavit is given by the HUF’s Karta state, as the case may be, the name, address, and father’s name of each member
• Identity proof, address proof, and date of birth.

-For Indian Company

Certificate of Registration which is issued by the Registrar of Companies (ROC)

-For LLP (Limited Liability Partnership) and Firm Which is Registered In India

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)

• Copy of bank statement of the residential country
• Copy of NRE bank statement in India

• Copy of resident certificate or Residential permit

• Passport copy
• PIO card photocopy
• OCI Card photocopy
• Copy of other national or citizenship Identification Number or TIN attested by relevant  ‘Apostille’, Indian Embassy, High Commission or Consulate

PROCESS FOR ACQUIRE PERMANENT ACCOUNT NUMBER CARD

There is 2 way to get PAN Card.i.e.

1. National Securities depository Limited (NSDL): www.tin-nsdl.com
2. UTI infrastructure technology & services ltd. (UTIITSL)::www.utiitsl.com

OFFLINE PROCESS

• Download the application form from the NSDL/UTIITSL website.
• Complete the form, and attach the supporting documents for POI/POA.
• Submit the duly filled form with NSDL/UTIITSL.
• You will receive your PAN Card within 15 working days.

ONLINE PROCESS

• Visit the website .i.e.: NSDL / UTIITSL.
• Fill the online application form.
• 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.

IMPORTANT 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

If you do not link your Permanent Account Number to 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.

Confronted with this, 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.

However, problems 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 Permanent Account Number is necessary.

Rajput Jain & Associates, Chartered Accountant, said that in view of the penalty provisions laid down in Section 272B and the latest notification, it could be understood that an 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.

However, 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.

Regards

Rajput Jain & Associates

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