Everything you Need to know about PAN and e-PAN

Income Tax PAN 2.0

PAN 2.0 Project is an e-Governance project. The software which is now running the existing system has been running for 10 to 15 years and their life is now over. Hence the need for a new information technology system was felt. PAN 2.0 will be complete paperless, online and the complete focus will be on the grievance redressal system of the user. The PAN card will not be changed unless the PAN holders want any updation and correction. The existing valid PAN cards will continue to be valid under PAN 2.0.

Benefits of PAN 2.0

• Convenience: The online process is user-friendly and can be completed from anywhere.
• Speed: Faster issuance and delivery of PAN cards.
• Accessibility: Easy access to your PAN card digitally, reducing the risk of loss or damage.
• Environmental Impact: Reduced use of paper contributes to environmental conservation.

What is a PAN card?

A permanent account number (PAN) is a distinct identification number issued by the income tax department of India to identify taxpayers in the country. This number enumerates the complete tax-related information of a person. On application, a PAN card is issued to the individual, with the PAN, name, photograph, date of birth and Father’s name.

In the present technology-driven world, this unique identifier can be obtained in an electronic format as well. It is digitally signed and its purpose stays equivalent to that of the PAN card. The primary purpose of the PAN to track various financial transactions that may be subject to income tax. This card holds a detailed record of all the financial transactions made by an individual or a firm and is issued to prevent tax evasion of any sort. The requirement of a PAN/e-PAN card is also made mandatory to open a new account in a public, private, or cooperative bank.

What is e PAN card?

An e-PAN card, or electronic Permanent Account Number card, is a digital version of the physical PAN card issued by the Income Tax Department of India. It has the same legal validity as a physical PAN card.

Benefits of e-PAN

• In the time of a global pandemic, it ensures that the process of obtaining it is secure and completed in a free-of-contact manner.
• The actual process of receiving a PAN takes around 15 to 20 days whereas e-PAN does not take longer than 48 hours once all the necessary documents get uploaded in the portal.
• This method does not involve paperwork, thereby making the entire process cost-free for the applicants.

Eligibility criteria for E-PAN

• The IT department will not issue an online PAN if an individual already possesses a physical PAN card.
• Any applicant domiciled in India must not be less than the age of 18 as per the Majority Act of 1875.
• The applicant must have an Aadhar card and a registered mobile number that is linked to it.
• You must be an individual taxpayer, which means E-PAN cannot be issued to HUF or company etc.

Procedure to apply for e-PAN?

Application for a fresh allotment of online PANs can be made by following a few no-sweat, simple steps.

e pan card apply with Aadhaar process:-

• Step 1(a): Go to www.incometax.gov.in and click on instant “e-PAN" from the lest side menu of the homepage.
  
  
• Step 2: Click on “Get New e-PAN”
  
  
• Step 3: Enter all the details as per your Aadhar card. The personal information entered is immediately verified and acknowledged.
  
  
• Step 4: You must sign on a blank sheet of paper and scan it with the specifications mentioned on the page.
• Step 5: Click "Submit PAN request" on completion of document upload.
• Step 6: The process for the application of e-PAN gets initiated and you will receive a 15 digit acknowledgment number.
• Step 7: You can check the status of your e-PAN from the NSDL web link by clicking on "Check Application Status" using your application number.
  
  
  
  Or Step 7(a): You can check the status of your E-PAN from the INCOME TAX PORTAL also by clicking on Instant E PAN and then clicking on check status and download PAN.
• Step 8: When your e-PAN is ready, you will be notified through a text message or an e-mail.

Is owning a PAN/e-PAN card mandatory?

It is indeed mandatory for people falling into the brackets of the conditions mentioned below:

• Everybody including citizens of India, minors, and foreigners who are liable to pay taxes or carrying out specific financial transactions like a high-value cash deposit or withdrawal in the bank are supposed to apply and own a digital or a physical PAN card.
• It is important to make deposits over rupees 50,000 in mutual funds.
• For the purchase of immovable property worth over 10 lakhs.
• If the fixed deposit exceeds 50000 in one, go or aggregate to more than 5 lakh during a Financial year.
• For the purchase and the sale of heavier motor vehicles, excluding less bulky two-wheelers.
• To open a bank account or a Demat account and apply for a credit or a debit card.
• Hotel and restaurant bills paid in cash in excess of Rs. 50,000 and any other specified transactions.

What to do when you don't own a PAN?

• After the Government made a few reformations to the pre-existing rules, it is possible to interchange your PAN and Aadhar numbers. Those who do not possess a PAN/e-PAN card can quote their unique Aadhar card number in the place of PAN as they are already linked with each other.
• Another method is by filling out Form 60 which is nothing but a signed declaration that the individual does exceed the tax limit and therefore does not possess a PAN/E-PAN card.
• Minors can easily quote the PAN of their parents or somebody whom they are under the guardianship of when they are not liable to file Income Tax Returns.

Different types of PAN/e-PAN cards

There exist four different types depending on the entity and the form of their income tax payments.

1. PAN/e-PAN for Indian residents
2. PAN/e-PAN for foreign citizens
3. PAN/e-PAN for Indian firms
4. PAN/e-PAN for foreign industries

The sole difference between a company PAN card and an individual's PAN card is that a signature and a photograph are not required for the former.

Both the cards hold individual's/company's name, date of registration, quick response (QR) code, a hologram of the government, the tag of the Income Tax Department, the 10 characters alphanumeric permanent account number, and the date of issue of the card in common.

Know what constitutes your PAN

Among the 10 alphanumeric characters, the first five are from the English alphabet. The next four are from the numerical, and the last one is from the alphabet again. The first three alphabets form a random combination of the English alphabet. The fourth character represents the status of that particular individual. There are nine divisions in total. They are C, H, F, A, T, B, L, J, P and G. Each of them stands for company, Hindu undivided family, partnership firm, an association of persons, trust, a body of individuals, local authority, artificial judicial person, individual and the Government respectively.

The fifth alphabet is the first letter of the individual's surname. The PAN number remains unchanged even if the person changes the last name post-marriage.

The next four digits are sequential yet random numbers between 0001 and 9999.

The final character is an alphabetic check digit, which is generated by applying a formula to the preceding nine letters and numbers.

Penalty for Multiple/Duplicate cards

According to the seventh provision of Section 139A of the Income Tax Act, 1961, an individual can hold only one permanent account number. There are strict regulations tied to it, and if an individual possesses more than one or a duplicate card, legal action will be taken.

As per Section 272B of the Income Tax Act, a penalty of rupees 10,000 will be imposed by the Government of India.

How to cancel or surrender a PAN/e-PAN card?

Offline Method-

• By visiting your local income tax office and handing over a request letter addressing the Assessing Officer (AO) to cancel or surrender your card. You will receive an acknowledgment slip, which must be kept safely.
• As another option, you can fill up Form 49A for any alteration in PAN and submit it to the closest UTI or NSDL TIN facilitation center.

Online Method-

• Step 1: By visiting the National Securities Depository Limited (NSDL) website.
• Step 2: Provide the details of the PAN/e-PAN card that you want to surrender, along with your details and contact number.
• Step 3: Press Submit and wait for the process to be completed.

Changes in PAN card transactions

From January 1, 2016, quoting a PAN card has been made mandatory for several financial and high-value transactions to curb black money and expand the tax base. The key transactions where PAN is required are as follows:

• Immovable Property: For the purchase or sale of immovable property valued above ₹10 lakh, a PAN card must be furnished. This limit was previously set at ₹5 lakh. Additionally, if the property’s value, as assessed by the Stamp Valuation Authority, exceeds ₹10 lakh, quoting a PAN is mandatory.
• Four-Wheelers: PAN is required for buying or selling a four-wheeler. However, transactions involving two-wheelers are exempt from this requirement.
• Deposits exceeding ₹50,000 at one time or ₹5 lakh in a financial year with banks, NBFCs, or post offices require PAN details.
• Account Opening: PAN is mandatory for opening accounts in any bank, whether nationalized or cooperative, except for accounts under the Pradhan Mantri Jan Dhan Yojana.
• If the total annual premium for life insurance policies exceeds ₹50,000, quoting PAN details is compulsory.
• Payments exceeding ₹50,000 in a year through prepaid instruments like gift cards, remittance cards, or social benefit cards require a PAN card.
• PAN must be quoted for cash payments exceeding ₹50,000 for foreign travel or buying foreign currency.
• One-time cash payments of ₹50,000 or more at hotels or restaurants necessitate PAN details.
• PAN is mandatory for cash purchases of bank drafts, pay orders, or banker’s cheques exceeding ₹50,000 in a single day.
• Depositing ₹50,000 or more in cash into a bank account in a single day requires a PAN card.
• Furnishing a PAN card is mandatory when applying for a credit card at any bank or financial institution.
• For transactions involving bullion or jewelry worth ₹2 lakh or more, whether paid in cash or by card, quoting a PAN card is compulsory.
• PAN details are required for mutual fund or bond purchases exceeding ₹50,000.
• PAN is essential for opening a DEMAT account or purchasing unlisted company shares exceeding ₹1 lakh.

As per Rule 114B of the Income Tax Department, quoting a PAN card is essential for the above transactions. These changes, introduced by the government, aim to control black money circulation and broaden the taxpayer base.

Why Do You Need a Tax Consultant?

• Tax Planning and Strategy
• Providing Specialized Tax Advice
• Ensures Compliance
• Helps you reply to Income Tax Notices
• Preparing and Filing Tax Returns

Need tax help? Book Tax Consultation Now!