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The Anatomy of a PAN Card

  • January 27, 2017
  • rootroot

The PAN, or the Permanent Account Number, is an alpha-numerical code that serves as identification for Indian nationals, especially those who are tax payers. Issued by the Indian Income Tax Department, supervised by the Central Board for Direct Taxes, the PAN serves as an important proof of identification.

For a majority of financial transactions in India, like the opening of a bank account, receiving a salary that is taxable, high-value transactions, etc., the PAN is mandatory.

The Purpose

The main purpose behind having a PAN is to bring universal identification to the financial transactions that are conducted, in an attempt to prevent tax evasion. The PAN is unique for every individual, and for the entire lifetime of the holder, it remains valid; and once issued, a change of address does not affect the PAN.

The Use

The PAN helps keep track of monetary transactions, especially the transactions conducted by high-net-worth individuals; transactions that may impact the economy. Quoting your PAN has become mandatory when you file your Income Tax returns, deductions, or anything else to do with the Income Tax department.

Details on a PAN Card

PAN card labelling alternate image
Issued under Section 139A of the Income Tax Act, the PAN card has the following details:

1. Your full name
2. Your father’s name
3. Your PAN
4. Your Signature
5. A photo
6. Beside the photo, written vertically are some numbers that denote the date of issue.
7. A hologram, right above the photo that proves authenticity of the card.

Decoding your PAN

pan3

The PAN is a 10 character code that can be decoded as follows:

  • i. The first three letters are an alphabetic combination that can be anything from AAA to ZZZ. The beginning of your PAN could be BBP or APZ, the selection of the first three letters is random.
  • ii. The fourth character is again a letter that defines you and represents your status. There are 10 classifications for the fourth character. A majority of cards have “P” as the fourth letter, as it represents an individual, or “personal”. The rest of the classifications are:A – AOP (Association of Persons)
    • B – BOI (Body of Individuals)
    • C – Company
    • F – Firm
    • G – Government
    • H – HUF (Hindu Undivided Family)
    • L – Local Authority
    • J – Artificial Juridical Person
    • T – Trust (AOP)
  • iii. The fifth character in the code is the first letter of your surname, if you have a personal PAN. Even if you change your name (after marriage, for instance), your PAN remains unchanged. In other cases, where the card is for a HUF, AOP, BOI, Local Authority, Government, etc., the fifth character will be the first letter of the name of the company, organization, trust, etc.
  • iv. The sixth to ninth characters are numerical, and can range anywhere from 0001 to 9999. Like the first three alphabets of the code, this selection is also random.
  • v. The last character of your PAN is an alphabetic check digit and is generated by the application of a formula to the preceding nine alpha-numeric characters.

And finally, a word to the wise….
It is illegal for one individual or one entity to hold more than one PAN card. Any failure in complying with the provisions that have been provided under Section 139A of the Income Tax Act has a penalty of ₹ 10,000 for each default.

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