PAN Structure and Meaning
A PAN consists of 10 characters in the format AAAAA9999A. The first three characters are alphabetic (AAA to ZZZ) — a sequential series assigned by the IT Department. The fourth character identifies the taxpayer type: P for individual persons, C for companies, H for Hindu Undivided Families, F for firms/LLPs, A for Association of Persons or Body of Individuals, T for trusts, G for government entities, and L for local authorities. The fifth character is the first letter of the surname (for individuals) or the first letter of the entity name. Characters 6 to 9 are a sequential number from 0001 to 9999. The tenth character is an alphabetic check digit computed from the preceding nine characters.
Mandatory Quoting of PAN
Section 139A and Rule 114B of the Income Tax Rules specify transactions where PAN must be quoted. Key thresholds: cash deposits above ₹50,000 per day in any bank account; purchase or sale of immovable property above ₹10 lakh; purchase of motor vehicles (excluding two-wheelers); purchase of jewellery, bullion, or art above ₹5 lakh; hotel or restaurant bills above ₹50,000 paid in cash; foreign travel payments above ₹50,000; purchase of mutual fund units above ₹50,000; purchase of bonds or debentures above ₹50,000; and opening any bank account or demat account. Failure to quote PAN attracts a penalty of ₹10,000 under Section 272B.
PAN-Aadhaar Linking
Section 139AA mandates linking of PAN with Aadhaar. The deadline was June 30, 2023. PANs not linked by that date became inoperative. An inoperative PAN has severe consequences: TDS is deducted at double the normal rate or 20% (whichever is higher) under Section 206AA; TCS is collected at double the rate under Section 206CC; ITR cannot be filed; pending refunds are withheld; and the PAN cannot be used for any financial transaction. To reactivate, link PAN with Aadhaar on the IT portal and pay a late fee of ₹1,000. Reactivation takes up to 30 days after linking and fee payment.
Applying for a New PAN
PAN applications are made through NSDL (now Protean eGov Technologies) or UTIITSL. Form 49A is for Indian citizens and entities; Form 49AA is for foreign citizens and entities. Applications can be submitted online (e-KYC via Aadhaar OTP for instant PAN) or offline. The fee is ₹107 for Indian addresses and ₹1,017 for foreign addresses (including dispatch charges). Instant PAN via Aadhaar-based e-KYC is free and issued within minutes on the IT portal. Each person or entity can hold only one PAN — holding multiple PANs attracts a penalty of ₹10,000 under Section 272B, and the duplicate PAN must be surrendered.