Permanent account number

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Permanent Account Number

A sample PAN Card
Agency overview
Formed 1961
Jurisdiction Indian Income Tax Department
Headquarters New Delhi
Website www.incometaxindia.gov.in/PAN/Overview.asp

Permanent account number (PAN) is the identifier of Indian income tax payers in the form of AAAPL1234C. It is unique, 10-character alpha-numeric identifier, issued to all juristic entities identifiable under the Indian Income Tax Act 1961. It is issued by the Indian Income Tax Department under the supervision of the Central Board for Direct Taxes (CBDT) and it also serves as an important proof of identification.[1]

Like Aadhaar and driving license, it is also issued to foreign nationals on valid visa as it is not a proof of nationality.

This number is almost mandatory for financial transactions such as opening a bank account, receiving taxable salary or professional fees, sale or purchase of assets above specified limits etc.

The primary purpose of PAN is to bring a universal identification to all financial transactions and to prevent tax evasion by keeping track of monetary transactions of high-net-worth individuals.

The PAN is unique, valid for life-time of the PAN-holder throughout India. It is not affected by change of address.

Physical appearance[edit]

PAN card size is of standard plastic bank-card. It bears face-photo of the holder, date of birth, date of issue and a hologram sticker as security feature. The card does not bear address of the holder. However, the accompanying PAN letter bears the address of the holder. The PAN number and the letter together may be accepted as address proof by the service provider.

Minors PAN cards issued thru UTI-ITSL do not bear photo nor the date of issue.

Older PAN cards issued before the year 2001 were black & white print on laminated plain paper with almost unrecognizable photograph. Those cards are still valid. People can apply for new plastic card Reprint (same PAN number) on payment of fee.[1]

Use of PAN[edit]

It is mandatory for filing income tax returns, tax deduction at source, new bank account, new telephone / mobile phone SIM, purchase of foreign currency, bank deposits above Rs. 25,000/=, purchase and sale of immovable properties, vehicles etc.[2]

Obtaining PAN[edit]

Obtaining PAN is optional and voluntary like passport, driving license, Aadhaar etc. However, its use is mandatory at required places, like PAN for high-value financial transactions, Driving License for motor driving, passport for foreign travel etc.

One can apply for PAN by submitting the prescribed PAN application to the authorized PAN agency of the district or thru online submission to NSDL along with 2 face-photos, ID proof, address proof and fee. In case of Re-print (re-issue), a photocopy of the old PAN is also required. Quoting Aadhaar Number attached with Aadhaar card is optional presently. However, it is recommended to provide Aadhaar letter now, if one has it, so that PAN gets linked to Aadhaar. It will save future effort of Aadhaar linking when it becomes mandatory. It takes about one month to receive the card and is sent by registered India Post.[3]

Fresh PAN[edit]

Application should be made on downloaded form-49A either at the counter of the authorized PAN agency of the district (use google search for nearest) or thru online application. In case of Online, one needs to print the submitted application, affix 2 face-photos, attach ID proof, address proof and fee of Rs.105/= thru cheque or Demand draft and send by post to NSDL office at -- 'NSDL e-Governance Infrastructure Limited, 5th floor, Mantri Sterling, Plot No. 341, Survey No. 997/8, Model Colony, Near Deep Bungalow Chowk, Pune - 411016'.

Re-print (re-issue)/ data correction of PAN[edit]

Those who wish to update/ correct personal data (photo, address, date of birth) or replace their damaged/ lost/ older non-plastic PAN card (i.e. laminated paper PAN) by the new plastic card PAN can simply apply for Reprint.[4]

Application should be made on Form-49AE either at the counter of the authorized PAN agency of the district (use google search for nearest) or thru online mode. In case of online, one needs to print the submitted application, affix 2 face-photos, attach ID proof, address proof, photocopy of old PAN and fee of Rs.105/= thru online-banking, cheque or demand draft. Send the completed paper application with attachments by post to NSDL office at -- 'NSDL e-Governance Infrastructure Limited, 5th floor, Mantri Sterling, Plot No. 341, Survey No. 997/8, Model Colony, Near Deep Bungalow Chowk, Pune - 411016', India.

Structure and provisions[edit]

  • IT PAN card is issued under Section 139A of the Income Tax Act.
  • The PAN structure is as follows: AAAPL1234C: First five characters are letters, next four numerals, last character letter.
  • The first three letters are sequence of alphabets from AAA to ZZZ
  • The fourth character informs about the type of holder of the card. Each holder is uniquely defined as below:
C — Company
P — Individual
H — HUF (Hindu Undivided Family)
F — Firm
A — Association of Persons (AOP)
T — AOP (Trust)
B — Body of Individuals (BOI)
L — Local Authority
J — Artificial Judicial Person
G — Government
  • The fifth character of the PAN is the first character
    • (a) of the surname or last name of the person, in the case of a "Personal" PAN card, where the fourth character is "P" or
    • (b) of the name of the Entity, Trust, society, or organisation in the case of Company/ HUF/ Firm/ AOP/ BOI/ Local Authority/ Artificial Jurdical Person/ Govt, where the fourth character is "C","H","F","A","T","B","L","J","G".
  • The last character is an alphabetic check digit.

Nowadays, the DOI (date of issue) of the PAN card is mentioned at the right (vertical) hand side of the photo on the PAN card.

The central government has introduced a new online service called "Know Your PAN" to verify or validate new and existing PAN numbers, which can be done by visiting this website.

Failure to comply with the provisions of Section 139A of Income Tax Act, penalty of Rs. 10,000/- for each default is payable u/s.272B by Assessing Officer.

Operating model[edit]

The issuance of PAN, verification, delivery and maintenance works on public private partnership (PPP) model like passport seva kendra (PSK) for reasons of economy, efficiency and effectiveness. It is operated by private companies (e.g. Bajaj Capitals, Karvy Consultancyn NSDL and 100 others) for processing of applications, collecting, handling and verifying personal documents like proof of ID, age and address, clarification with the applicants, printing the card and the letter and then mailing it. The processing agencies obtain the new PAN number online from the server of the income tax department after successful processing of the application documents. Some critiques in India may call the handling, processing and delivery of personal ID and financial documents by private contractors as violation of privacy, however it is not so.[5][6][7][8]

Authentication of PAN can be done by anyone online thru this link income-tax website. It take name and date of birth as input and outputs / verifies only the name, PAN number and active / inactive status; not the face-photo and address.

Problem areas[edit]

Privacy violation as no consent-based data access[edit]

The PAN number of any person can be obtained unauthorizedly without the knowledge or consent of the holder from the official website of the income tax department.[9] One has to just know or guess the name and date of birth to get to the PAN number of that person without his or her consent.

Once PAN number is obtained, then any public or private agency, finance company, bank, insurance can access various details of the PAN-holder including the credit-history from CIBIL, because from technological and process perspective, no consent is required to do so unlike Aadhaar. Thus it is not safe and secure; and leads to unauthorized access to various financial data which are supposed to be confidential. Therefore, such PAN based data access are violation of right to privacy. Whereas for Aadhaar authentication, holder's biometric consent (finger-print) is required from technological and process perspective to access the Aadhaar demographic data.[10][11]

Illegal Immigrants as PAN-holders[edit]

Millions of illegal immigrants are estimated to be the holders of genuine PAN card. Obtaining PAN is easier than obtaining ration card and voter card. Unauthorized PAN agents publish posters and advertisements in towns and cities, who help out for money not only the genuine residents but also illegal immigrants to obtain PAN card based on fudged identity and address documents. The fudged identity and address documents are either really issued by some MLAs, MPs and gazetted officers for money received from these agents or are fake ones produced using modern scanner-printer technology. After obtaining PAN, the illegal immigrants then go on to open bank account and obtain other documents such as passport, voter card, ration card, driving license and Aadhaar etc.[12][13][14][15][16][17][18]

More PAN than required[edit]

Although there are only 30 million (3 crore) income tax payers in India, yet there are 170 million genuine PANs issued as of 2013. It is unnecessary load on the PAN system that is difficult and costly to maintain. This large bloated number is mainly due to two reasons:[19]

  • Many people obtain it to use as general identity card (who have not yet got their multi-purpose ID - Aadhaar card).[19]
  • Duplicate/ multiple PANs for various frauds.[20]

Multiple and fake PAN menace[edit]

Although alphanumeric PAN number is unique yet many individuals and corporate entities are able to obtain multiple PAN cards fraudulently. It is illegal to obtain multiple PANs and there is a penalty of Rs.10,000/= when caught. This penalty is too little to work as deterrence compared to the gain of millions by tax evasion due to slab system and other frauds. In addition, there are fake PAN cards due to ubiquitous plastic card printers and lack of facility to verify PAN online instantly at the point of service (PoS) like Aadhaar.[21][22]

Modus operandi to obtain multiple PANs[edit]

Fraudsters, tax evaders and benami property-holders have easily been able to obtain multiple PANs fraudulently by furnishing different addresses or re-sequencing names (first, middle, last names). For example, name Ajay Kumar Gupta can be put as Ajay Kumar, Ajay K. Gupta, Ajay Gupta, Gupta Ajay Kumar etc. Since PAN is not linked to biometric data of the PAN-holder unlike Aadhaar card, passport nor driving license, hence it is easier to obtain multiple PANs. Therefore, PAN is not unique as of now unless linked with Aadhaar number for individuals and with BIC for corporate entities.[20][23][24][25]

Solution to problems[edit]

Consent-based data access thru Aadhaar[edit]

Biometric (finger-print) consent can be made mandatory to access PAN related data including credit-history. It is possible after PAN-Aadhaar linking is complete. It will prevent unauthorized access to various confidential financial data. Thus privacy violation can be prevented.[26]

Complete Aadhaar enrollment soon[edit]

As of April 2014, 51% of the population (62 crore) have been assigned multi-purpose national identity card Aadhaar. It is growing at the rate of about 1 million per day.[27] Presently many states have 70% to 100% Aadhaar penetration e.g. Delhi, Andhra, Maharashtra, Himachal, Puduchery, Goa, Kerala, Sikkim, Chandigarh, Punjab, Tripura, Karnataka etc.[28] Once the coverage reaches 100% by December 2015 as planned, then people will not apply unnecessarily for PAN unless it is required for paying income tax.[27][29][30]

De-duplication of PAN: linkage with Aadhaar and Corporate-UID[edit]

The Finance ministry has plans to detect and weed out multiple PANs by linking (seeding) it to individual's Aadhaar number, hence linking to the unique biometrics of the PAN-holder. Because of this reason, now the PAN application (form 49A) asks for Aadhaar number. Providing Aadhaar number is optional at present. However, Aadhaar-linkage of PAN may become compulsory once Aadhaar penetration reaches over 80% in the country i.e. by 2015.[31][32][33][34]

Another way to implement Aadhaar–PAN linkage is on the lines of Aadhaar–LPG linkage; that is, whichever states or districts have reached 80% Aadhaar generation, in those areas new / re-issue of PAN and ITR filed from April 2014 onward must be linked with Aadhaar letter or Aadhaar registration acknowledgement.

PAN of corporate entities ( e.g. companies, trusts, NGOs, political parties etc.) can be linked with corporate-UID once the UIDAI starts assigning it. So far work on corporate-UID has not been published by the UIDAI. However, the corporate-UID has been provisioned within the 12-digit UID number system.[35] The corporate-UID is supposed to produce the similar effect for corporate entities as Aadhaar does to a person, that is, identification and traceability of transactions. It is supposed to bring transparency on financial transactions and donations, and to prevent corruption, money laundering, benami transactions (i.e. under a fictitious name), allocation of natural resources like land, spectrum, mining of sand, iron ore, coal blocks, etc. A similar identifier is defined by Europe and USA in ISO 9362 (business identifier code – BIC) for international business transactions (financial and non-financial).

Invalidation of illegal immigrant's PAN[edit]

Once illegal immigrant is detected, then all other documents such as PAN, passport, bank account, voter card, ration card, driving license held by him/ her can be found in one day and made invalid while deportation. It can happen only when the Aadhaar-linkage is made compulsory with these documents.

Process comparison: Aadhaar, passport, driving license and PAN[edit]

The identities given in the following table were devised for its special purpose except Aadhaar. Passport is to identify international traveler, driving license is for eligibility to drive, Permanent account number (PAN) is to identify income tax payer. (sources: Aadhaar enrollment form, Aapka Aadhaar, passport seva,driving license, PAN)

Till the absence of National ID of India - Aadhaar, people have been using these special purpose identities for general purpose despite various deficiencies, e.g. PAN card is not accepted as proof of address due to absence of address on the card, driving license and passport cannot be verified instantly at the point of general service etc. The perusal and analysis of these identities from the viewpoint of people, process, tools and technology at the point of service authentication show its strength and weaknesses as general purposes identity, hence degree of acceptability.

Process comparison for Aadhaar, passport, driving licence and PAN
Data Type Parameters Aadhaar Passport Driving licence PAN
Biometric-1 Face photo Yes Yes Yes Yes
Biometric-2 Fingerprint Yes Yes Yes No
Biometric-3 Iris Image Yes No No No
Biometric-4 Identification mark on body No Yes Yes No
Biometric-5 Blood group No No Yes No
Biometric-6 Vision No No Yes No
Biometric-7 Medical test (BG, vision, diseases, etc.) No No Yes No
Biometric-8 Height No No Yes No
Biometric-9 Weight No No Yes No
Demographic-1 Name Yes Yes Yes Yes
Demographic-2 Parent's name Yes Yes Yes Yes
Demographic-3 Gender Yes Yes Yes Yes
Demographic-4 Date of Birth / Age Yes Yes Yes Yes
Demographic-5 Education No Yes Yes No
Demographic-6 Home Address Yes Yes Yes Yes
Demographic-7 Neighborhood references No Yes No No
Document-1 Photo ID proof Yes Yes Yes Yes
Document-2 Date of Birth / Age proof Yes Yes Yes Yes
Document-3 Home Address proof Yes Yes Yes Yes
Document-4 Education proof No Yes Yes No
Document-5 Aadhaar Number proof (optional) N.A. Yes Yes Yes
Other-1 Voluntary to obtain Yes Yes Yes Yes
Other-2 Digital identity Yes No No Yes
Other-3 Validity for life Yes No No Yes
Other-4 Verifiable anytime at point of service Yes No No No
Other-5 Fee No Yes Yes Yes
Other-6 Given to all residents Yes No Yes Yes
Other-7 Citizenship proof No Yes No No
Other-8 Documents verified Yes Yes Yes Yes
Other-9 Delivered by Registered India Post Yes Yes Yes Yes
Other-10 Police verification at home No Yes No No

See also[edit]

References[edit]

  1. ^ a b TIN
  2. ^ UTIITSL India: Financial & IT Service Provider, PAN Card Issuer
  3. ^ PAN Card Application
  4. ^ Message
  5. ^ PAN Card Application
  6. ^ UTIITSL India : Financial & IT Service Provider, PAN Card Issuer
  7. ^ Become PAN Card Agent
  8. ^ Passport Seva : About Us | Passport Seva
  9. ^ Know Your PAN
  10. ^ CIBIL | Check Credit Score Online before applying for a loan
  11. ^ How to Check Your Credit Score Online in India: 6 Steps
  12. ^ Pak infiltrators arming themselves with PAN cards - The Times of India
  13. ^ Illegal Bangladeshis PAN out in India to cement their Aadhar
  14. ^ 198 Bangladeshis held, 164 deported | The Asian Age
  15. ^ Bombay High Court :- A Birth Certificate, Passport Or Even An Aadhaar Card May Not Be Enough To Prove That You Are An Indian Citizen | Indialegalaid
  16. ^ Passport alone no proof of citizenship: Bombay HC - The Times of India
  17. ^ Bangla infiltrator gets Indian passport - Indian Express
  18. ^ Passport, birth proof not enough to claim Indian citizenship: HC
  19. ^ a b I-T dept may make d-o-b proof mandatory for PAN card - Economic Times
  20. ^ a b Multiple PAN cards to attract Rs 10,000 fine. The Times of India.
  21. ^ "Crooks fake credit history, dupe banks in Kolkata". Times of India. 2012-10-19. Retrieved 2014-03-26. 
  22. ^ "Rs 1 crore e-fraud: Fake PAN cards used to open several bank accounts". Times of India. 2013-02-10. Retrieved 2014-03-26. 
  23. ^ Tax evaders seen holding multiple PAN cards. Business Today. (24 March 2011).
  24. ^ New PAN card to cost Rs 105; aims to weed out fake PAN card issue. The Economic Times. (28 January 2014).
  25. ^ Income-Tax Department detects and destroys 11.69 lakh multiple PAN cards. Moneylife.
  26. ^ UIDAI makes KYC process paperless to improve customer service - Economic Times
  27. ^ a b Every second Indian now has Aadhaar number - Economic Times
  28. ^ Get Aadhaar to obtain PAN card now. The Times of India. (7 April 2013).
  29. ^ Income tax department to quiz PAN holders not filing returns - The Times of India
  30. ^ Why having a PAN card is so important - Business Today - Business News
  31. ^ Now, Aadhaar Card valid identity, address proof to get PAN. The Economic Times. (26 December 2013).
  32. ^ Now, Aadhaar number required for a PAN card!!!. CIOL (10 April 2013).
  33. ^ Now, get Aadhaar number to obtain your PAN card. Business Line.
  34. ^ Editorial: Won’t PAN out. The Financial Express.
  35. ^ http://uidai.gov.in/images/commdoc/other_doc/A_UID_Numbering_Scheme.pdf

External links[edit]