What is PAN? - Permanent Account Number

1. PERSONS REQUIRED TO APPLY FOR PAN
Following persons are under statutory obligation to apply for PAN—
Every person, (individual, HUF, firm, Ltd. Company, association of persons, etc.) who has taxable income, or
Every person in business or profession whose turnover or gross receipts exceed Rs. 5 lakhs in a year. That means every person having income from salary or profession or business or having rental incomes or interest income or capital gains income should apply, if the person has a taxable income. In the case of persons in business or profession, even if they do not have any taxable income, it is necessary to apply for PAN when their turnover or gross receipts exceed Rs. 5 lakhs in any year.
All charitable trusts which are required to furnish their income-tax return under the law.
All such persons who may be specified by the Central Government by a notification in the Gazette. The Central Government has already specified the following persons and the time-limits for application.
(a) Persons registered under CST Act or GST Act on or before December 11, 2001 should apply before January 2002.
(b) Persons who wish to register under GST Act or CST Act after December 11, 2001 should apply before making such application for registration.
(c) Exporters and importers, assessees under Central Excise Rules, assessees of Service Tax who are existing on August 29, 2000 should apply by September 13, 2000. And when they fall in these categories after August 29, 2000, they should apply before making imports or exports, and before making application for registration under the above Acts.
Any other person (inlcuding minor) may also apply for PAN. In addition to the above cases, the Assessing Officer may also allot the PAN to any other person who is liable to tax.

2. PERSONS EXEMPTED FROM OBTAINING PAN
Conversely, all the persons who do not come under the above provisions are not required to obtain PAN. They are :
Non-residents up to March 31, 2005.
Persons who have agricultural income and do not have any other income chargeable to tax. Such persons have to give a declaration in Form No. 61 in respect of transaction for which PAN is required to be quoted.
The Government consulate officers in the transactions where they are responsible for the payment of such amounts.

3. APPLICATION FOR PAN CARD
The persons who are required to apply for the PAN have to apply in Form No. 49A. This form is available with the authorized agents of the Income-tax Department, such as UTI, NSDL, etc., for Rs. 5 or it can be downloaded from the websites of the Income-tax Department, for example, http:/tin.nsdl.com, or they are also available in local stationery shops.
Documents required to be enclosed with PAN application form are as follows :
(i) In case of individuals for the proof of identity, one of the following documents may be filed :
Copy of school leaving certificate or Matriculation Certificate or Degree, or depository account or credit card or bank account or water bill or ration card or Property Tax Assessment Order or Passport or Voter Identity Card or Driving License or certificate of identity signed by MP or MLA or Municipal Councillor or a Gazetted Officer.
(ii) In case of individuals for proof of address, one of the following documents may be enclosed :
Copy of Electricity Bill or Telephone Bill or Depository Account or Bank Account, or Ration Card or Employer Certificate or Passport or Voters Identity Card or Property Tax Assessment Order or Driving License or rent receipt or Certificate of address signed by MP, MLA or Municipal Councillor or Gazetted Officer.
The common documents useful for both proof of identity as well as proof of address are as follows which can be preferred to attaching 2 documents.
Depository Account, or Credit Card, or Bank Account, or Ration Card, or Passport, or Voters’ identity card, or driving license.
(iii) In the case of other assessees, following documents are required to be attached :
HUF—Any above documents in respect of Karta of the HUF.
Company—Copy of Certificate of Registration issued by the Registrar of Companies.
Firm—Copy of Certificate of registration issued by the Registrar of Firms or copy of the partnership deed.
AOP (Trusts)—Copy of trust deed or copy of registration number.
AOP/BOI/Local Authority—Copy of agreement or copy of Certificate of Registration Number issued by the competent authority or any other document establishing the identity and address of such person.
Artificial Judicial Person—Copy of agreement or copy of Certificate of Registration No. issued by the competent authority or any other document establishing the identity and address of such person.

4. WHEN TO APPLY
The application for PAN should be made before 31st May of the assessment year for which a person is taxable. This is because the last date of filing returns is 31st July in some cases and 31st October in some cases. So, before filing return, the PAN should be available with the person. The Income-tax returns are not accepted by the Income-tax Department without the PAN.

CONTENTS OF FORM NO. 49A AND HOW TO FILL IT
5. The application form contains :
1. Space for a photograph of the individual applicant. 2. Full name. 3. Name to be printed on the card. 4. Any other name of the applicant. 5. Father’s full name. 6. Residential address. 7. Office address. 8. Address for communication. 9. Telephone number. 10. E-Mail ID. 11. Sex. 12. Status.
13. Date of Birth or Date of Incorporation or Formation. 14. Registration Number in case of companies. 15. Citizenship. 16. Where employed-name of the office. 17. Nature of business or profession. 18. Full name and address of the representative assessee. 19. Details of enclosures for proof of address and proof of identity. 20. Signature and date.
The applicant should follow the following instructions for filling Form 49A
u This form should be filled in BLACK INK only.
u The form should be signed in BLACK INK only, by the applicant at 2 places provided in the form.
u A 3.5cm. × 2.5 cm. sized photograph, colour or black and white is to be pasted at the place provided in the form.

CONTENTS OF PAN CARD
6. The PAN card of an individual contains a photo of the individual, and a PAN, which is allotted to the assessee. It also contains the full name of the assessee and that of the assessee’s father, and the date of birth of the individual. The assessee’s specimen signature is also found on the card. In case of persons other than individuals, there will not be any photo and father’s name. In place of date of birth, date of incorporation, or formation, or commencement is given.
The Chief Commissioner of Income-tax signs on the card with all this information with a 3 line monogram. On the card issued by the agencies such as UTI, etc., the Chief Commissioner’s signature is not found. Further, if a person wants abbreviated names on the card, he may choose so and in such cases the full names are not printed on the card.

WHEN AND WHERE THE PAN SHOULD BE QUOTED OR FURNISHED
7. The PAN should be quoted or furnished in all the following cases and transactions irrespective of whether the payment is made in cash or by cheque :
u Income-tax, Wealth-tax and Gift-tax returns.
u Certificates (TDS, TCS and certificates to be furnished under Income-tax Act).
u Correspondence with the Department.
u Tax payment challans.
u Sale or purchase of immovable property of Rs. 5 lakhs or more.
u Sale or purchase of a motor vehicle.
u Term deposit exceeding Rs. 50,000 in any bank.
u Deposit exceeding Rs. 50,000 with post office SB A/c.
u Application for telephone including cell phone.
u Payments exceeding Rs. 25,000 to hotels and restaurants at any one time.
u Purchase of bank drafts or pay orders of Rs. 50,000 or more on any one day.
u Cash deposit of Rs. 50,000 or more on any one day with any bank.
u Cash payment of an amount exceeding Rs. 25,000 on any one day to any travel agency for foreign travel or the purchase of foreign currency. This is not applicable for travel to Bangladesh, Maldives, Bhutan, Nepal, Pakistan, Sri Lanka, Saudi Arabia for Hajj or to Kailash Manasarovar in China.
u In case of bank accounts opened in the names of the minors, the guardian’s PAN is required to be quoted.
u Application for registration under General Sales Tax Act and CST Act.
u Application for registration under Service Tax Rules.
u Application for empanelment of auditors.
u Application for registration under Central Excise Act.
u Deposit exceeding Rs. 50,000 with post office under the senior citizen savings scheme.
u Tender documents.
u Director’s PAN in their company’s Income-tax return.
A few more transactions have been added recently, and they are as under:
u Application for credit card.
u All documents pertaining to payment of Rs. 50,000 or more for purchase of units of mutual funds, shares, debentures, or bonds of companies or institutions and RBI bonds.
If a person who does not have a PAN makes a payment in cash in respect of any transaction mentioned above, he can make a declaration in Form No. 60, giving the particulars of such transaction. This Form 60 is not necessary if the payment is by crossed cheque or crossed Demand Draft.

PAN ON VARIOUS DOCUMENTS
8. With effect from June 1, 2001, when any person deducts any tax at source, every such person deducting tax should mention the PAN of the payee in the statements and all the certificates issued, and all returns to be filed by such deductor. Similarly, when any person collects tax at source, he should mention the PAN of the payer in all statements, certificates and returns to be filed by the tax collector. Every deductor of tax at source should mention the PAN of the deductee in the certificate as per the deductees’ declaration. TDS certificate without PAN of the deductee is not valid and the department does not accept the annual returns of the TDS without the PAN of the deductees. Therefore, every deductor should insist the deductee to furnish the PAN. In some circumstances, where the PAN is not available, the deductees should furnish Form No. 61 to the deductors.

PAN CARDS LOST, OR MISTAKES NOTICED ON PAN CARD
9. PAN cardholders can always apply in an appropriate form for a new card if the old card is lost. A fresh card will be given with the same PAN. Similarly, if any mistakes are found on the PAN card in respect of spellings, mistakes in the names or dates of birth, etc., the PAN cardholder can apply for necessary corrections and for re-issue of the card which is generally done by the Department or by their agents.

PRACTICAL DIFFICULTIES
10. The Income-tax Department prescribed Form No. 60 to mitigate hardship of persons who do not have PAN or GIR No. and who wish to make payments in cash in respect of the following transactions:
- Sale or purchase of any immovable property of Rs. 5 lakhs or more.
- Sale or purchase of a motor vehicle.
- Term deposit exceeding Rs. 50,000 with any bank.
- Deposit exceeding Rs. 50,000 with Post Office Savings Bank.
- Sale or purchase of securities exceeding Rs. 1 lakh.
- Opening an account with any bank.
- Making an application for telephone connection.
- Payment to hotels and restaurants exceeding Rs. 25,000 at any one time.
Therefore, the persons who do not have PAN or GIR No., but still wish to make the payments in cash, can furnish Form No. 60, and come out of the requirement of furnishing PAN or GIR No.
Similarly, the Income-tax Department prescribed Form No. 61 to mitigate hardship of persons who have only agricultural income and do not have any other taxable income and wish to enter into any of the transactions mentioned above. So, such persons can furnish Form No. 61 and still enter into the above transactions without furnishing their PAN or GIR No.
The customers of race clubs include many common people who do not have PAN, for the simple reason that their incomes may not be chargeable to tax. So, they cannot furnish their PAN to race clubs when they win dividends (race winnings), of more than Rs. 2,500. The race clubs are not supposed to pay dividends (race winnings), as they cannot issue TDS certificates to the payees without their PAN and the department does not accept the annual returns from the race clubs without PAN of payees. There is no provision to furnish Form like 60 or 61 for receiving the dividend payments (race winnings) without furnishing PAN. This problem appears to have not been foreseen by the Government and the Income-tax Department. That is why this problem is not solved so far. Therefore, the Department should prescribe some Form like 60 or 61 to overcome this problem. The winners of race dividends cannot obtain any authorization from the Assessing Officer since the winnings from horse races are taxable fully without any exemption. Due to this, the investments of the patrons are reduced or restricted when the winnings exceeding Rs. 2,500 are not paid without furnishing PAN. The punters, whose income is not chargeable to tax, do not have PAN and they cannot apply for PAN in anticipation of winnings from races. Therefore, the Government or the Income-tax Department should give a thought to this problem and help the racing industry by prescribing a form to be submitted by those who do not have PAN or by waiving the requirement of quoting PAN on the TDS certificates issued by race clubs, and in the TDS Annual Return filed by race clubs.

CONTENTS OF FORM NOS. 60 AND 61
11. Form No. 60 contains the following information to be furnished by the declarant :
- Full name and address of the declarant.
- Particulars of the transaction.
- Amount of the transaction.
- Assessment particulars of the declarant and particulars of the last return filed.
- Reasons for not having PAN or GIR No.
- Details of the document being produced in support of name and address.
- Verification, date, place and signature of the declarant.
In support of the name and address, ration card, or passport, or driving license, or electricity bill, or telephone bill may be produced.
Form No. 61 contains the following particulars to be furnished by the declarant.
- Full name and address of the declarant.
- Particulars of the transaction.
- Details of documents produced in support of name and address.
- Declaration that the person has income only from agriculture, and he/she is not required to pay income-tax on any other income.
- Verification, date, place and signature of the declarant.
In support of the name and address, ration card, or passport, or driving license, or electricity bill, or telephone bill may be produced.

COMMUNICATION OF PAN DATA
12. Every person who collects the PAN from various persons is under obligation to forward the following documents to the concerned Director of Investigation of the Income-tax Department.
(1) Details of documents pertaining to any transaction referred to in the foregoing paragraph, where payment is made in cash.
(2) The details include the names and addresses of the person entering into the transaction, date, and nature of the transaction, amount of transaction, PAN or GIR No. quoted in the documents.
(3) Copy of declaration in Form 60 or 61.
(4) Form No. 60/61 received between April and September should be submitted by October 31st and the Form No. 60/61 received between October and March should be submitted by April 30th every year.
Following are the persons who are under obligation to collect the PAN of various persons and communicate the same to the Director of Investigation of the Income-tax Department.
u Registration officer of the Immovable property - Registering Authority.
u Motor vehicles registering authority.
u Manager of bank.
u Post Master.
u Stock-brokers and all such persons dealing in security transactions.
u Telephone application receiving authority or company.
u Hotels/Restaurants.
u Travel agents of foreign tours.
u Foreign exchange sellers.
u Any person selling immovable property or motor vehicle.
These persons should also ensure that the PAN is correctly quoted in the documents or declaration in Form No. 60 or 61, as the case may be.

OTHER POINTS
13. Every person who receives any documents of the abovementioned transactions, where PAN is required should ensure that the PAN or GIR No. has been duly quoted in the document.
Any failure to comply with the provisions of section 139A, i.e., applying for PAN, not quoting PAN wherever it is necessary, not furnishing PAN as required, and quoting or furnishing wrong or false PAN will attract a penalty of Rs. 10,000. Prevention is better than cure. Therefore, the persons obliged under these provisions should comply with them to prevent any damage.
The PAN cardholder should inform the department about the change in the address, name and nature of the business and constitution of the enterprise.
A person holding a PAN card or PAN should not apply again for another PAN. It has been decided in a court case that the PAN cards should be issued within 3 months from the date of application.
Recently, the Government has opened ASK (Ayakar Sampark Kendra) and any person can dial 0124-2438000 and ask for information or form for PAN and status of any PAN application.

14. ADVANTAGES
u This card serves as an identity card for any purpose.
u It serves as an address proof and age proof for availing privileges of senior citizens in buying air tickets, train tickets, and availing higher rate of interest, etc.
u Verification of specimen signature.

CONCLUSION
15. In view of the above requirements of Law, the persons who are required to obtain PAN should obtain and furnish or quote the same correctly as and when required. The persons collecting the data of PAN should pass on the same to the Department. The Department may also look into the practical difficulties faced by the punters and the race clubs, and prescribe a form to be furnished to the deductors by the winners when they do not have PAN. The Department may also waive the requirement of quoting PAN on the certificates issued by the race clubs for the payment of race winnings and furnishing their PAN in the Annual Returns. This will help the racing industry in improving their collections and complying with relevant provision of the Income-tax Act with regard to the PAN. In future, the Department may add some more transactions, which require the PAN of the persons, for example, the application for passports, visas, purchase of gold, or any valuable merchandise, or any other applications, payment of admission fee to any club, etc. All the persons receiving such amounts or applications may be required to forward the PAN data to the Department. So, it is always advisable to have the PAN at the earliest so that there will not be any delay to enter into such transactions and deal with situations for which PAN would be necessary. A stitch in time will certainly save nine.