Have you ever wondered what the confusing 10 character code of you PAN card signifies? I used to think that these are randomly generated numbers/alphabets as I was not able to relate any of the characters to my personal details. But that is not the case. Each digit on the PAN card has its own significance.
I read it somewhere last year . I try to explain that to you here. Read it, it will be interesting. When I explained this to my friends they were pleasantly surprised. It is your turn to look like a genius now!
What is a PAN and its significance
PAN Card or Permanent Account Number issued to the citizens of India is an identity provided to the taxpayers. The account is a unique ten-character alphanumeric number and is available under the Income Tax Act, 1961.
The Indian Income Tax Department oversees the management of the account under the supervision of the Central Board of Direct Taxes (CBDT). Apart from a mere taxpayer identity, it also serves as proof of identification. The account is also available to foreigners upon submitting a valid visa and employment status.
The introduction of the account provides a simple process and a monitoring system for the government to prevent tax evasion. It assists the government to retain a track of all the monetary transactions of people drawing high-net salaries and self-employed individuals, organizations, and corporations.
Quoting the PAN number is mandatory while filing income tax returns. Additionally, financial transactions exceeding Rs. 50,000/- require quoting the PAN number. The same is applicable while buying immovable assets and vehicles. Now the government has made PAN mandatory for all cash transactions above Rs 1 lakh.
Obtaining the PAN is optional like other documents such as passport, driving license, Aadhaar, etc. However, companies, industries, salaried individuals and self-employed individuals require PAN to quote it while filing the income tax for a fiscal year. It is always better to possess a PAN card.
What each character of your PAN means
As I said before, each of the character in your PAN has a significance. Unlike some alpha-numeric numbers in a random procession, the PAN number provides details of the account holder in a unique way. The PAN number is a ten digit alpha-numeric number, printed on a laminated card and issued by the Income Tax Department.
The I.T. Department issues the card to any individual who applies for a PAN card. The PAN number of the person holds an important element for all the financial transactions. Additionally, it becomes imperative to quote the number for correspondence with I.T. Department authorities and all the financial transactions.
The first five figures of the representation are alphabets, the next four digits are numbers and the last number is again an alphabet. All these digits have a meaning and reveal the information/details of the account holder. The following explains the figures and their meaning:
- The first three characters, which are alphabets, is a combination of letters in the format AAA to ZZZ. The I.T. Department allocates the digits randomly and is a combination of the letters such as AZT or ZRT based on state applied from and sequence of application number.
- The fourth digit is an essential character and reveals a lot of information about the holder. The character identifies the account holder’s category. For example, letter “P” in the number states that the holder belongs to the “individual” category, as designated by the I.T. Department. The following is the status assigned by the department authorities based on the details received through the application:
- P = Individuals
- F = Firm
- C = Company
- H = HUF
- A = AOP (Association of Persons)
- T = Trust
- G = Body of Individuals
- L = Local
- J = Artificial Judicial Person
- G = Government
- The fifth character in the number is the first letter of the account holder’s surname or last given name. For instance, if the applicant’s name is Ramesh Kulkarni, the fifth letter, in this case, will be K.
- The four numeric digits next in the number are a randomly selected numbers between 1001 and 9999.
- The final character in the account number is the result of the calculation based on a formula that accommodates all the nine characters.
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The PAN account number reveals information about the account holder in a simple method. The categorization by the I.T. Department allows them to trace the transaction details by an individual, a company or a firm with ease.
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