Know your Permanent Account Number

04 February, 2013

Permanent Account Number or the PAN Card has become an essential document, because without it you cannot do large banking transactions or convince others regarding your identity. Unaffected by any change in address, the PAN is unique, national, and permanent.

PAN Card is issued by the income tax department under the government of India. PAN is almost mandatory for every financial transaction, such as opening a saving or fixed deposit bank account, transferring money in other accounts, receiving taxable salary or professional fees, sale or purchase of assets above specified limits, stock market dealings, purchase of real estates and vehicles, among others.

Speaking briefly, the most important purpose of allotting PAN to an entity is for the purpose of identification and to track all the related monetary information of that entity.

Along with banking transactions, PAN is useful in proving identity for many purposes like during train journey, air ticket booking, booking a hotel room, and taking an accommodation on rent, new mobile connection plus any other transaction where identification proof is required. If you need to do banking transaction or you travel around the country then life will not be easy without PAN.

In a PAN card, first five characters are letters, next four are numerals and the last character is again a letter. The fifth character of the PAN is the first character of the surname or last name of the person, in the case of a "Personal" PAN card, where the fourth character is "P". Whereas the fifth character of the PAN is the first character of the name of the Entity/ Trust/ Society/ Organisation in the case of Company/ HUF (H-Hindu Undivided Family) / Firm (F) / AOP(T-Trust) / BOI (B- Body of Individuals) / Local Authority (L) / Artificial Juridical Person (J) / Govt (G), where the fourth character is "C","H","F","A","T","B","L","J" and"G".

The date of issue of PAN card is mentioned at the right (vertical) hand side of the photo on the PAN card. If a person wants to open a fixed deposit account with any bank for an amount more than 49,000 rupees, copy of PAN card needs to be submitted, else the bank will deduct TDS of 20% or at the prevailing rate, whichever is higher (instead of the normal 10%). Further, the bank will not issue TDS certificate. In this case, Form 15G/15H and other exemption certificates will be invalid.

If you hire a hotel room and at the time of check-out you are paying a bill of Rs. 25,000 or more in cash then you are required to give a copy of your PAN card. Similarly, a buyer needs to produce his or her PAN in case of high-value purchase of jewellery in cash to curb the use of black money. PAN is required while making payments to travel agents, payment in second hand car dealing and visa facilitation centres.

One should be very careful while using the PAN card number or furnishing a copy of the same as PAN related frauds are on rise these days. In case you are submitting your PAN card copy to someone then you must mention the particular purpose on the copy and sign it so that it could not be used for any other purpose.