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What is a PAN in India

Subsequent to DIN and DSC in India, another significant identification number is the PAN. Despite the fact that the PAN in India is assigned not only to companies, it mostly interests our clients in the aspect of business. Every company registered in India is assigned a PAN, which remains unchanged throughout its existence.

What exactly is PAN and what purposes does it serve?

What is a PAN in India

Posted 5 December 2023

What is a PAN in India?

PAN (Permanent Account Number) in essence signifies a taxpayer identification number.

This is a unique number assigned to all taxpayers in India. The number is allocated by the Indian Tax Department (specifically the Income Tax Department of India) and serves the purpose of taxpayer identification. PAN in India is issued as a plastic card consisting of 10 alphanumeric values.

Important:

Since every taxpayer in India obtains a PAN, it is not exclusively for companies. PAN is required for anyone receiving taxable income within India.

Why is PAN in India required?

1. Firstly, PAN is assigned by the Income Tax Department to every taxpayer as a unique taxpayer code.

PAN is mandatory for conducting financial transactions such as receiving taxable salaries or professional fees, selling or purchasing assets above set limits, investing in funds, and more.

The primary aim of PAN is to use a universal identification code to track taxable financial transactions and prevent tax evasion.

2. Secondly, PAN serves as an identity proof.

Another crucial function of PAN is the identification of its holders. Listed below are some situations where PAN is required:

  • For paying direct taxes;
  • For filing income tax returns;
  • To conduct specific transactions, for instance:
    • selling or purchasing immovable property worth more than INR 500,000;
    • paying in cash exceeding INR 25,000 for a journey to any foreign country;
    • paying INR 0,000 or more to a company for acquiring shares;
    • paying over INR 500,000 for purchasing bullion and jewelry;
    • and more.
Interesting:

The PAN number remains unchanged when the address changes within India.

How to obtain a PAN?

To acquire a PAN in India, one needs to apply using Form 49A or Form 49AA.

The form choice depends on the applicant for PAN.

Form 49A is filed in cases where the applicants are:

  • Indian citizens;
  • Companies and firms registered in India;
  • Unincorporated entities created in India.

Form 49AA is filed in cases where the applicants are:

  • Individuals not being Indian citizens but earning taxable income in India;
  • Entities registered outside India earning taxable income in India;
  • Unincorporated entities created outside India earning taxable income in India.

Want to get further insights?

Schedule your free consultation with our expert!

Diane

Diane, partner of GFLO Consultancy

Duration for PAN issuance

The duration for obtaining the number depends on several factors, including who the number is being assigned to.

For instance, companies are allotted PAN upon their registration (read more about company registration in India), but the production of the plastic card takes time.

On average, the processing time is about 1-2 weeks.

Conclusion

PAN in India is a unique alphanumeric code required by all taxpayers in India. If a non-resident company earns income in India, it needs to get a PAN.

GFLO Consultancy experts are pleased to assist and help you with any inquiries, just get in touch or leave a request through the form right below.

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