The Buyt Desk
Permanent Account Numbers (PAN) is a 10-digit alphanumeric number containing some vital information about the PAN cardholder. Let us understand in detail.
A permanent account number is a ten-character alphanumeric identifier, issued by the Indian Income Tax Department in the form of a laminated “PAN card”. It is also issued in e-form as a PDF file. Even an e-file is PAN. Anyone who needs to file income tax returns needs a PAN. Under Section 139A of the Income Tax Act, under the supervision of the Central Board for Direct Taxes (CBDT), the PAN and the PAN related cards are issued. PAN is considered an important proof of identification by all Indian bodies. PAN is not issued for Indians but also foreign nationals having valid visas who invest in India. So PAN doesn’t prove Indian citizenship.
What is the purpose of PAN?
The purpose of PAN is to identify the taxpayers on the computer system through a unique alphanumeric pattern. All information about taxpayers like outstanding arrears, taxes paid, income disclosed, refunds issued, transactions entered etc. can be extracted.
PAN alphanumeric structure
Through UTI and NSDL the income tax department issues PAN cards. There is a methodology to generate a unique PAN card number. PAN is not a random generation of alphanumeric identifiers by a computer but a meaningful structure. The PAN is 10 digits alphanumeric and it considers a few permanent parameters of a taxpayer. To make sure each PAN is unique, the Phonetic Soundex code algorithm is used. The five core fields without which PAN is not allotted are full name of the taxpayer, Date of birth / Incorporation, Marital Status, Gender in the case of individuals and Father’s name in the case of individuals. Using this 5 core fields system automatically generates unique PAN centrally for all of India.
What is the significance of 10 Digit alphanumeric?
The 1st 3 digits of PAN are alphabetic series anywhere between AAA to ZZZ. The 4th digit is also an alphabet indicating the type of holder of the card. This is what each letter denotes A is for AOP (Association of persons), B is for BOI (Body of individuals), C is for Company, F is for Firm, G is for Government, H is for HUF (Hindu Undivided Family), L is for Local authority, J is for Artificial juridical person, P is for Person (Individual) and T is for Trust (AOP). The 5th digit is also an alphabet denoting the first character of either the first name, surname or last name in the case of a “personal” PAN card and the name of the entity, trust, society, or organization in the case of a trust or company or HUF or firm or AOP or BOI or local authority or artificial judicial person or government. The next four digits are numbers between 0001 – 9999. And the last digit is the alphabetic check digit. The alphabetic check digit is generated by applying a formula to the preceding nine letters and numbers and it is a unique code for every PAN holder.
How is issuing more than one PAN for the same person or firm monitored?
Authorities have come up with a new concept known as phonetic PAN (PPAN) which helps them avoid issuing more than one PAN to applicants with the same/ similar names. AIS uses key fields of the applicants and internal algorithms to work out the PPAN. Every new PAN is compared to PPAN of all across the nation to check if it is a duplicate of an already existing one. When a matching PPAN is found, the applicant is sent a warning about PAN already existing. A new PAN can be issued only when the Assessing Officer decides to override the duplicate found. This 10 digits alphanumeric structure has provision to generate 17 crores unique PAN for each status like personal, Firm, trust etc.
Issuing PAN
All personal taxpayers have processed PAN cards having their Permanent Account Number, photograph, name, date of birth, father’s name and signature printed on it. The computer centre has the applicant’s photograph and signature scanned. The PAN cards are printed in these computer centres. Only permanent things are printed on the PAN card hence the address is not printed. Also, the names of directors, partners or members of HUF are not printed as it makes no sense to print many names on a PAN card.
