Permanent Account Number (PAN) is the identifying number of Indian Income-tax payers. It is a must for anyone who wants to file his 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 monetary transactions of high-net-worth individuals.
A sample format of PAN is AAAPL1234C.
In a PAN, 4th character is a deciding factor whether it is for an Individual or Company or HUF, etc.
For example if the 4th charachter is:
- P is for Individual / Personal.
- H is for HUF.
- C is for Company.
- T is for Trust.
- F is for Firm.
- A is for 'Association of Persons'.
- B is for 'Body of Individuals'.
- G is for Government.
- L is for 'Local Authority'.
- J is for Judicial Person.
Obtaining a Permanent Account Number is necessary for most of the financial transactions done in India. PAN is required for filing of Income-tax return, obtaining a loan from bank, high value transactions, asset purchase etc. This has become mandatory in almost all the financial transactions.