Be Business Ready With the Permanent Account Number (PAN) in India
A quick informational checklist from 3E Accounting about the Permanent Account Number (PAN) in India.
If you want to do business in India, then it is mandatory to get a Permanent Account Number or PAN. The PAN will need to be quoted on all business documentation and financial transactions. This requirement was brought about by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
After you register your company with the Ministry of Corporate Affairs or MCA, a Certificate of Incorporation will be issued. To apply for a PAN, you will need to submit a copy of the Certificate of Incorporation and the business’ registered address. Foreign investors need to supply similar requirements certified by their country of origin. You will also need to provide a bank draft for the fees.
A PAN has ten alphanumeric characters (e.g. AAACA1234B) that will be unique to your business. The first three alphabets (AAA) are sequential. The fourth alphabet (C) will identify the entity’s legal structure (C for Company). The fifth alphabet (A) can be either a person’s surname or the name of the company (A for Accounting). The numbers and remaining alphabet form a verifying code. Hence, a PAN acts as a ‘universal identifier’ that provides legality to your business entity. It is also needed for income tax filing and other business transactions.
Only one PAN card can be allotted to an individual, and any fraudulent activity can incur stiff financial penalties from the Income Tax Department. The PAN is valid throughout the lifetime or existence of the PAN holder.
Getting a PAN
The Indian Income Tax Department issues the PAN to any person who applies for it. In the event there is no application, it will be given to anyone as allotted by the department. A PAN can also be issued to foreign investors with valid visas, charitable trusts, etc.
PAN can be in the form of either a laminated PAN card or an E-PAN sent to your email in pdf format. Form 49A and Form 49AA are application forms that need to be filled in by Indian citizens and foreigners, respectively. The forms can be submitted at authorized PAN agencies such as the NSDL TIN-Facilitation Centres / PAN Centres. PAN can also be applied for online from the same agencies via:
- National Securities Depository Limited or NSDL e-Governance website.
- UTI Infrastructure Technology and Services Limited or UTIITSL website.
- Aadhar Cardholders can apply for immediate PAN via e-KYC, or Electronic Know Your Customer, online service provided by the Unique Identification Authority of India or UIDAI.
It is now mandatory to quote your PAN when dealing with all matters related to taxation, opening a bank account, purchasing a vehicle, etc. However, as of 2019, for all PAN numbers linked to Aadhar Cards, it is permissible to quote the Aadhar number only. To know more about PAN and its application, check out the Indian Income Tax Department’s FAQ page.
3E Accounting offers solutions for company incorporation, license and permit applications and other compliance matters. All of 3E Accounting’s suite of business solutions are customizable to your specific needs.
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