The permanent account number is a 10-digit alpha-numeric code issued by the Income-tax department. Every individual has a unique one.
It acts as identification proof. It is compulsory for anyone who wants to file an Income-tax return.
It is issued by the Indian Income Tax Department under the supervision of the Central Board for Direct Taxes (CBDT) and it also serves as an important proof of identification.
The primary purpose of PAN is to bring a universal identification to all financial transactions and to prevent tax evasion by keeping track of the monetary transactions of high-net-worth individuals.
A sample format of PAN is AAAPL1234C.
The fourth character of PAN represents the status of the PAN holder. For example, if the 4th character is "P", the PAN holder is an Individual. Likewise, the fourth character for other PAN holders is as follows:
| Fourth Character | Status of PAN Holder |
| H | Hindu Undivided Family (HUF) |
| C | Company |
| T | Trust |
| F | Firm |
| A | Association of Persons |
| B | Body of Individuals |
| G | Government |
| L | Local Authority |
| J | Artificial Juridical Person |
Obtaining a Permanent Account Number is necessary for most of the financial transactions done in India. PAN is required for filing Income-tax returns, obtaining a loan from a bank, high-value transactions, asset purchases, opening a bank account etc.
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