Do you know that each character of your PAN card number contains some details? Every thing, sentence has some reasons why it is like that. Similarly, your PAN has also some interesting meaning.
Let’s us explain to you what the meaning of Permanent Account Number?
Meaning of PAN Card
PAN Card is an identity card that is issued by the Income Tax Department in India. It is a ten digits “AlphaNumeric” number that is important for filing Income tax return also.
Benefits of PAN Card
Obtaining PAN card is not mandatory for the individuals (subject to some conditions). However, some transactions need PAN card mandatorily. Therefore, it is advisable to possess a PAN card.
To the Government
- Helps in monitoring the tax evasions
- Assist the government in tracking all high-value monetary transactions
To the Individual
- Filing ITR and claiming a tax refund
- Opening a Demat account
- Investing in Mutual Funds and Stock Market
- Deposit cash in the bank.
- Transaction in immovable properties
- To establish smooth financial transactions above Rs. 50,000
Mandatory to obtain PAN by following categories
- Every person (including any other persons’ income in which he is assessable) whose total income increases the maximum limit not chargeable to tax during the previous year.
- Every person carrying on the business or profession having sales, turnover, gross receipts exceeds or likely to exceed Rs. 5 lakh.
- Every person wants to perform any specified transactions under Rule 114B of the Income tax act, 1961
- Every non-resident person (including person associated with them*), if the financial transaction during a financial year exceeds Rs. 2,50,000.
- A charitable trust, required to furnish return under section 139 (4A)
* Persons associated with Non-resident include the managing director, director, partner, chief executive officer, author, trustee, founder, Karta, principal officer or office bearer of the non-individual resident persons or any person competent to act on behalf of such persons.
Read More: Form 60, PAN Card and Rule 114B
Meaning of Characters of your PAN Card
PAN is a ten-digit alphanumeric number in the format, for example – “AAAFS8586Z.” It contains the first five alphabets, then the next 4 digits are numbers, and again an alphabet at last. All the 10 characters have the meaning, as explained below:
1. First three characters, i.e., “AAA” in our format are the random digits allocates by the IT department. It can be any three alphabets from any sequence.
2. Fourth letter, i.e., “F” in our format represents the category of the account holder. In the Income-tax Act, it defined different types of the assessee, and respective status is assigned to each assessee class. Such as:
A = AOP (Association of Persons)
B = BOI (Body of Individuals)
C = Company
F = Firm/Limited Liability Partnerships
G = Government Agency/Body of Individuals
H = HUF (Hindi Undivided Family)
J = Artificial Judicial Person
L = Local authority
P = Individuals
T = Trust
So, in our format, it is reflecting the PAN card of a “Firm.”
3. The Fifth character is the first letter of the person’s surname or last name he has provided while applying for the PAN card. In our format, it is “S.”
4. Then, it comes four number digits that are randomly selected with any number of combinations. In our format, it is “8586.”
5. At the end, the last character is based on the combination of the first 9 characters.
Significance of PAN Card Number
The main character of PAN card number, i.e. letter “Fourth” is the main part that reveals information about the account holder and helps the IT department to understand their financial transactions.
It enables them to link all the transactions that easily access the assessee’s investment, borrowing, and other routing transactions that can prevent from paying tax.
How to Apply For PAN?
Applying for PAN is a simple and quick process by filing the relevant forms at NSDL website and attaching the required documents, i.e.,
Forms applicable:
- Form 49 A (Applicable for Indian Citizens)
- Form 49 AA (Applicable for Foreign Citizens)
Documents to be attached:
You can apply either for physical PAN card number or E-PAN Card in PDF format. E-Pan is Pan provided I PDF form rather the delivering in the physical card. It is sent on the applicant’s email ID.