You might have heard multiple ways people call it – PAN number, PAN card, Permanent Account Number or just PAN – means the same, one of the most important document which is needed in the Indian financial market. PAN is 10 digit unique alpha-numeric number alloted by Income Tax Department of India to applicants and looks like as follows:
It’s utility is perhaps similar to National Insurance number in UK or a Social Security number in USA. Essentially every material transaction in India is required to be supported by a PAN so that tax authorities can track the transaction and pin down on black money. A couple of examples where PAN is required to be quoted are :
- Cash deposits in banks over Rs. 50,00.
- Investments into Mutual Funds, Fixed Deposits with Banks or Post offices for over Rs. 50,000.
- Sale & Purchase of properties over Rs. 5 lac.
- Restaurant bills over Rs. 25,000.
- Sale / Purchase of motor vehicles (except 2 wheelers) exceeding 50,000.
- Purchase of Jewellery over Rs. 5 lac.
- Payment of over Rs. 50,000 towards Life insurance premiums.
Who Should Have a PAN ?
A million dollar question. As per the Income Tax Act, PAN is mandatory for a specific list of people such as :
- Whose income is more than minimum tax slab (e.g. greater than Rs. 2 lac for individuals);
- Whose business / profession has a total sales / turnover or receipts greater than Rs. 5 lacs;
- One who is required to furnish a return of income; OR
- Any one whom Income tax department thinks should pay tax.
If you note the above paragraph where PAN needs to be quoted, you would realise that even though you may not fall under the mandatory list of people who should have a PAN, but you would still be required to get a PAN to enter into such transactions. Hence, I believe the tax authorities would love if every one has a PAN so that their financial transactions can be tracked.
How to Apply a PAN – Resident Individuals
Luckily amongst the easiest tasks (if there are any) to do with regards to tax matters in India, is to apply for a PAN. Not that I am trying to mention that it is very simple, but in overall scheme of things like filing of returns, chasing for refund, etc, applying for a PAN is simpler. Broadly it involves the following steps :
- Obtain Form 49A – either download it from Income Tax’s website or take a form from any of the centres where you can deposit the form;
- Fill the form and sign in appropriate places.
- Attach a photograph.
- Attach required self attested documents – basically you need an ID and address proof.
- Submit the form with specified fees (currently Rs. 96).
Alternatively fill the form online at http://www.myutiitsl.com/PANONLINE/ , take a printout and submit it after completing points 2 to 5 above.
How to Fill the Form
Most of the fields in the form are self explanatory such as Name, father’s name, date of birth, address,etc. However, I would like to point the following :
- Fill the form in BLACK ink and in CAPITAL letters
- There are no specific photo requirements – as long it is within 3.5 cm x 2.5 cm. It should be clear and I would generally suggest to have it in a light coloured background;
- The new Form 49A requires signatures to be done in two specific manner. On the right hand side box (below the photo box) – the signature should be within the box and not touch the photo. On the left hand side box, signature should be partially crossing into the photograph (cross sign).
- The AO code on the top of the form can be filled based upon the assistance provided by the submission counter of UTITSL.
- Address details on the form should be supported by an address proof.
- The section of Representative assessee is generally left blank. It is filled at times by NRIs who want some one in India to act as an assessee on their behalf. However these cases are rare.
What Documents to Attach
Documents required for a PAN application are categorised into two – proof of identity and proof of address. Generally I recommend (if possible) to submit just one document from the list as they suffice as both ID & address proof :
- Driving License
- Voter ID Card
- UID Adhaar card
For minors, any of the parent’s documents are generally acceptable.
For HUFs, ID & Address proof of Karta are required.
I do appreciate that not all people would have such proofs readily available. Other forms of acceptable ID & address proofs are mentioned in the back of the the PAN form.
Where to Submit
Completed PAN application forms can be submitted at UTI Infrastructure Technology And Services Limited (UTITSL) offices. Their offices are dotted all across India and your nearest office can be located by visiting UTI’s website by clicking HERE .
For people who can’t reach physically to UTI’s offices, I would strongly recommend to take assistance of an advisors / CA who can help you to get your application filled and submitted.
PAN for NRI’s
PAN card procedure for NRI’s is structurally similar to residents. A few nuances are :
- A different form is filled – Form 49AA which is almost same as Resident’s form except with a few different fields;
- Documentation requirements are tailored for NRIs.
- Fees for NRIs is higher – Rs. 962 if the applicant wants to get his PAN card delivered to his address outside India. However, if the delivery address is in India, it would be subject to same fees as in case of residents of India (currently Rs. 96).
I must admit that since 2012 after Tax Authorities introduced the new (easier) requirements for NRIs to obtain PAN, life has become much simpler. To understand these differences, let me explain the documents required from NRIs as a part of their application :
1. Indian Passport copy plus foreign visa OR
2. Foreign Passport copy; OR
3. Copy of PIO / OCI card.
3. Address proof – copy of passport, OCI / PIO Card, utility bill, bank statement.
A full list of acceptable documents are mentioned on page 7 of the form.
Earlier, point 2 was required to be attested by Indian embassy, consulate or by local Apostille ! This was an administrative night mare and a costly affair. It involved foreign passport holders to visit Indian embassy office in their respective foreign country. Trust me, it is a battle to get this done – both from cost perspective as well as time required to visit the embassy / apostille ! This conditiona has now been removed and only a copy of the passport would work.
Multiple PAN Cards
Avoid a temptation to have multiple PAN cards as it is illegal to have more than one PAN. You are inviting a penalty of Rs. 10,000 per instance.