PAN Full Form, Structure and Importance

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PAN Full Form, Structure and Importance

PAN full form is Permanent Account Number. It is issued by the Income Tax Department. In this blog post, we shall discuss what PAN is, its structure, importance and more.

What is PAN Full Form?

PAN full form is Permanent Account Number. It is a unique 10-digit alphanumeric identifier issued by the Income Tax Department to individuals, businesses and entities in India. The PAN is issued in the form of a polycarbonate card known as PAN Card. 

It can also be obtained in the form of PAN card PDF, popularly known as e-PAN, from the official Income Tax Department website. PAN is regarded as a valid ID proof and required for various purposes such as traditional savings bank account opening, loan application, credit card application, trading account opening, etc.

Structure of PAN

As mentioned earlier, PAN contains 10 alphanumeric digits. Each character in PAN represents unique information about the PAN holder. The first five characters of PAN are alphabets. Then, the next four digits are numbers. The last PAN character is an alphabet. 

The first three characters are a random alphabetic series. The fourth letter represents the category of pan holder from the following categories:

• C - Company

• P - Person/Individual

• H - Hindu Undivided Family

• F - Firm

• A - Association of Persons (AOP)

• T - Trust

• B - Body of Individuals

• L - Local Authority

• J - Artificial Juridical Person

• G - Government

The fifth character of PAN is the first letter of PAN holder’s surname or entity name. 6, 7, 8 and 9 characters are sequential numbers from 0001 to 9999. The 10th character is an alphabetic check digit generated via an internal algorithm.

Example of PAN format is: AAAAA9999A. 

Details Contained in PAN Card

The PAN card is a crucial document containing the following details:

• Name of PAN holder (individual/company/LLP/partnership firm).

• Name of Father, in case of individual cardholder.

• Date of Birth of Cardholder, in case of individual.

• Date of Registration of Cardholder, in case of company or firm.

• 10-Digit Alphanumeric PAN Number 

• Signature of Individual Cardholder

• Photograph of Individual Cardholder. 

Note: No photograph is presented in case of company or firm.

Importance of PAN

The importance of PAN can be understood with the help of the following points:

• PAN allows the government to track financial transactions of individuals as well as entities.

• This 10-digit alphanumeric number is mandatory for ITR filing.

• PAN reduces instances of money laundering. This is because every financial transaction having high value, like property purchases, large bank deposits, investments in securities, foreign remittances, etc., must be linked with a PAN.

• PAN is mandatory for opening a traditional savings bank account, trading in stock market, purchasing real estate, loan application and so on.

• For various government services and schemes, PAN is a widely accepted proof of identity.

• Having a PAN card along with other necessary documents is essential for systematic investment plans. 

• KYC (Know Your Customer) is a mandatory process for verification of investors’ identities. For ensuring KYC compliance, having a PAN is a must. 

Conclusion

PAN full form is Permanent Account Number. The Income Tax Department issues PAN offline in the form of a physical card and online in the form of e-PAN card. The PAN consists of 10 alpha-numeric digits. In the PAN card, essential details are included like name of cardholder, date of birth of cardholder, name of father, photograph and signature of individual PAN holder.

Frequently Asked Questions (FAQs)

Q1. What is PAN full form?

A. The full form of PAN is Permanent Account Number.

Q2. How many digits does PAN contain?

A. PAN contains a total 10 digits. These digits are alphanumeric.

Q3. What does the fourth letter of PAN indicate?

A. The fourth letter of PAN indicates the type of PAN holder, i.e., the category of the entity or person.

Q4. Is PAN mandatory for opening a bank account?

A. No, it is not mandatory to have a PAN to open a bank account. You can submit other documents like Aadhaar, voter ID, passport or driver's license. Without a PAN, you can open a small account. However, this kind of account provides fewer features and certain limitations compared to a traditional savings account.

Q5. Which government department issues PAN card in India?

A. The Income Tax Department of India issues PAN card in India.

Q6. Do NRIs require PAN?

A. Yes, if the NRIs are involved in financial transactions in India, they must have a PAN.

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