What is PAN Card ? Where PAN card is required ?

What is PAN Card ? Where PAN card is required ?

PAN – Permanent Account Number is a 10 digit alpha-numeric code that is used for tracking financial transactions ( income , investments & spending's ) especially those who pay tax.

The income Tax PAN code and its linked card are issued by Income tax department under section 139A of Income Tax Act , 1961. First issued on 12-January-1964.

STRUCTURE OF A PAN CARD

PAN card code can be breakdown in 5 steps

First 5 characters are the letters  followed by 4 numbers and the last character is again a letter.

After Your Name , Father Name & Date of Birth there is a 10 digit PAN code.

Indian PAN card

Ex : PAN code – ABCDE1234F as shown in above image.

STEP 1

First 3 letters form a sequence of alphabets from AAA to ZZZ.

STEP 2

Fourth ( 4^th ) letter informs about the type of account holder.

Type of holder defined from the list below.

A – Association of Persons (AOP)

B – Body of Individuals (BOI)

C – Company

F – Firm

G – Government

H – Hindu Undivided Family (HUF)

L – Local Authority

J – Artificial Juridical Person

P – Individual (Proprietor)

T – Trust (AOP)

K – Krish (Trust Krish)

STEP 3

Fifth (5^th ) letter is the first letter of surname or last name of the person. In case of a Personal PAN card, where the fourth Character is ‘P’.

OR

Name of the Entity , Society , Trust , Organisation in the case of Company / HUF /Firm / Trust / BOI / Local Authority / Government, where the fourth character is “C”,”H”,”F”,”A”,”T”,”B”,”L”,”J”,”G”.

STEP 4

Next comes the 4 numbers forming sequence between 0000 to 9999.

STEP 5

The last (10^th) character is alphabetic digit used as a check-sum to verify the validity of that current code.

Here are the transactions where PAN card is required

·         For opening a bank account , except Jan Dhan account.

·         For opening a demat account.

·         Cash transaction in bank exceeding Rs.50,000 in single day.

·         For hotel/restaurant bill payments above Rs.50,000.

·         For mobile wallet transactions of more than Rs.50,000.

·         Over Rs.50,000 investment in mutual funds/debentures/RBI bonds/Life insurance policy.

·         For purchase of foreign currency or cash payment related to foreign travel exceeding Rs.50,000.

·         For buying all goods or services over Rs.2 lakh, including gold.

·         During purchase/sale of immovable property exceeding Rs.10 Lakh.

·         Business or profession where total sales, turnover or gross receipts exceed or are likely to exceed Rs.5 Lakh.

·         The Pension Fund Regulatory and Development Authority has started using PAN apart from Aadhaar for online registration under National Pension Scheme.

·         PAN is also mandatory for buying or selling motor vehicles ( other than 2 wheeler)

TDS: Banks can withhold tax at a higher rate of 20 per cent if you do not provide your PAN. Only 10 per cent is deducted if the bank has your PAN details.