Permanent Account Number (PAN)

Permanent Account Number is a ten-digit number allotted by the Income Tax Department to an assesse who has applied for PAN in the Form No. 49A of the Act. The PAN is meant to identify the returns, tax payment challans and the correspondence received from the assesses and link these to their assessment records to facilitate quick disposal of their refund claims or assessments. The Department has authorized UTI Investor Services Ltd (UTICL) to manage IT PAN Services Centres in all cities of towns. Every person having the Total Income above exemptible limit and every business or profession whose total sales turnover or gross receipts exceed Rs. 5 Lakh should own or obtain PAN. It is mandatory for every assesse to quote the PAN in his IT Returns. The non-furnishing or furnishing incorrect PAN attracts a penalty of Rs. 10,000.

Cases under which PAN is compulsory:

PAN is compulsory for all assessee if

(i) His income exceeds the exemption limit.

(ii) He is liable to pay tax on behalf of other person as a representative assessee.

(iii) If he is carrying on a business or profession and his total sales, turnover or gross receipts are likely to exceed Rs. 5,00,000 in any financial year.

(iiia) Charitable trust.

(iiib) Person being a resident other than an individual, which enters into a financial transaction of an amount aggregating to Rs. 2,50,000 or more in a financial year.

(iiic) The managing director, director, partner, trustee, author, founder, Karta, chief executive officer, principal officer or office bearer of the person mentioned in (iiib), or any person competent to act on behalf of the person mentioned in (iiib).

(iv) If he is importer or exporter.

(v) If he is an assessee under the Central Excise Rules, 1944.

(vi) If he issues invoices under rule 57AE of the Central Excise Rules, 1944 and he is registered

(vii) If he is an assessee under the Service Tax Act.

(viii) If he is an assessee under the Central Sales Tax Act or Value Added Tax Act of a state or Union Territory.

(ix) If he is entitled to receive any sum or income or amount on which tax is deductible at source.

Other provisions relating to PAN

Quoting PAN is compulsory in the following transactions: (Rule 114B)

1. Immovable property: (i)Sale/purchase exceeding 10 lakh: (ii) Properties valued Stamp Valuation Authority at an amount exceeding 10 lakh.
2. Motor vehicle (Other than two wheelers): All sales purchases.
3. Time deposit: Deposits with the bank, Co-op bank, Post Office, Nidhi, NBFC.
4. Sale or purchase of securities (other than shares): Contract for sale/purchase of a value exceeding Rs. 1 lakh per transaction.
5. Opening an account (other than time deposit with a banking company or Co-operative banks: Basic Savings Bank Deposit Account excluded (no PAN requirement for opening these accounts)
6. Hotel/restaurant bills at any one time: Cash payment exceeding 50,000 in a day.
7. Cash purchase of bank draft/pay orders/banker's cheques: Exceeding Rs. 50,000 on any one day.
8. Cash deposit with a banking company or co-operative bank: Cash deposit exceeding Rs. 50,000 in a day.
9. Foreign travel: Cash payment in connection with foreign travel or purchase of foreign currency of an amount exceeding Rs. 50,000 at any one time (including fare, payment to a travel agent)
10. Credit card or Debit card: Application to banking company/any other company institution/co-operative bank
11. Mutual fund units: Payment exceeding Rs. 50,000 for purchase.
12. Opening a Demat account.
13. Purchase or sale of shares of an unlisted company: For an amount exceeding Rs. 1 lakh per transaction
14. Debentures/Bonds: Payment exceeding Rs. 50,000.
15. RBI bond: Payment exceeding Rs. 50,000.
16. Life insurance premium: Payment exceeding Rs. 50,000 in a financial year
17. Cash cards/prepaid instruments issued under the Payment and Settlement Act: Cash payment aggregating to more than Rs. 50,000 in a year.
18. Purchases or sales of goods or services other than specified in 1 to 17: Exceeding Rs. 2 lakh per transaction.

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Do Not Write below this note
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Redrafted for Educational Purpose.

Deekshith Kumar,
Assistant Professor of Commerce

Book Reference:

1. Income Tax Law and Accounts, by Dr. H. C. Mehrotra and Dr. S. P. Goyal

2. Business Taxation by Sadashiva Rao